§ 3.37 p.m.
§ Lord Allen of Abbeydale rose to call attention to the White Paper Charities: a Framework for the Future (Cmnd. 694); and to move for Papers.
§ The noble Lord said: My Lords, I should like to begin by expressing my appreciation to those who put down their names to speak in the debate. I hope that I may be forgiven if I say how especially pleased I am that the noble Viscount, Lord Whitelaw, has felt able to contribute to these discussions. It may not be an especially glamorous topic compared with some of the wide-ranging issues discussed during the opening days of the Session, but it seems to me to be quite important. What we say today could affect the content of promised legislation.527
§ I am conscious that I have not invariably spoken from these Benches in enthusiastic support of government proposals. Today it is a pleasure to be able to start by giving a warm welcome to this White Paper, for, despite its colour, that is what it is. I should like to thank the Government for presenting that detailed document and, unlike what happened with another White Paper about which we know, giving us time to discuss it before legislation is prepared.
§ I feel slightly apologetic —but only slightly —when I look back at the number of debates on charities that I have initiated. At any rate they have provided a means for the Government to perform a gradual and graceful curve. Only three years ago the Government went on record as saying that they had no plans for changes in the charity law; yet here we are now, with the slight disappointment that there will be no legislation in this Session but with a commitment to have legislation before the end of this Parliament. We also have a White Paper which, although there are some loose ends still left, tells us in some detail what the Bill is likely to contain.
§ I was interested to read in Tuesday's edition of The Times that the Government have introduced a charities Bill which is currently going through Parliament. However, I think that we should be well advised to continue our discussions today on the assumption that for once that great organ may have got it wrong. The last major piece of legislation in this context was the Charities Act 1960. Since then there have been many changes. It is estimated that charities in England and Wales now collect and spend something over £10 billion a year and enjoy tax privileges—privileges which, it is fair to say, have been extended by this Government and which amount to some £2.5 billion a year. We have now discovered that television appeals can reach pockets that more traditional appeals cannot reach. Social needs have changed greatly, and so has the scope for abuse.
§ Following the Woodfield inquiry and the report made by the Public Accounts Committee in another place —which brought to notice some of the problems that we have already been discussing in this House for some years —we now stand on the verge of major new legislation. Since it is likely to be quite a long time before we have another major Bill, we must do our best to get it right.
§ There are one or two preliminary points. The Government say rather grandly in the White Paper that they will continue to provide the necessary resources. I pass over without comment the suggestion that they have been providing such resources in the past. I hope that the Minister will be able to give us rather more information. My impression is that there will be additional staff and not merely the redistribution of those who will be released from functions that are to be given up. But it will be agreeable to have that confirmed. I cannot envisage that the charity commissioners can carry out their enlarged role unless they receive more resources.
§ Secondly, to put more responsibility on to trustees is no doubt a good idea, but when one thinks of the 528 vast number of small charities it may not be all that easy to find enough knowledgeable trustees with the time to spare. In the new order of things they will need rather more help and guidance than they receive at present. It is also desirable that the responsibilities put on trustees by this new legislation should not be too complicated.
§ Thirdly —to strike a slightly discordant note —I find it a little disturbing that the White Paper should begin by discussing the voluntary sector in terms which rather imply that charity law is mainly at issue in respect of those bodies which co-operate with the Government in carrying out government policy. There are a very large number of small charities where that consideration simply does not arise. It would be a pity to mix up the efficiency scrutiny of government funding of the voluntary sector with the review of charity law.
§ Turning to the White Paper, I agree with the main objectives of the Government. As I understand them, they are to make the Charity Commission focus more sharply on monitoring and investigatory work at the cost of giving up certain functions on some of the advisory work; to reduce the scope for abuse; to put more responsibility on trustees; and, above all, to maintain public confidence.
§ It is not very easy to do justice to the 63 pages of the White Paper in the time at my disposal. I shall simply do my best to pick out some of the major issues as I see them. I start inevitably with the question of whether an attempt should be made to find a legal definition of charity. It is perhaps typically British that we should rest in the main on the preamble to an Elizabethan statute which has long since been repealed and the judicial pronouncement made a century ago before the welfare state was thought of. However, I agree with the conclusion that we do better to put up with what we have.
§ One slight personal disappointment is that no one else seems to think anything of the idea that following the legislation concerning race and sex discrimination there should be a suitors' fund whereby test cases could be taken to the courts. I do not read the proposal in the White Paper that the Charity Commission should be enabled to go direct to the courts as a means of enabling it to seek a declaratory judgment on a legal condundrum. It seems to me, though I may be wrong, that although charity law is what the courts tell us it is, there is still only an accidental and occasional means of having issues tested in the courts. But so be it, my Lords.
§ There is the special difficulty of whether anything should be done about cults with anti-social characteristics. It is not surprising that the White Paper should deal with this topic at some length since it is one that arouses deep feeling, especially as two of the many bodies functioning under the Moonies secured registration as charities. Noble Lords will recollect that the noble and learned Lord, Lord Denning, has addressed us with some eloquence on the topic on more than one occasion. However, I confess that I hesitate over the proposition in the White Paper that the law should be amended to make it explicit that the Charity 529 Commission has the power to remove a body from the register where there is evidence that it is acting in ways not for the public benefit. The amendment in those terms would not be limited to religious bodies and I do not know where it would take us. I am sure that lawyers would welcome the prospect of arguing in the courts about the meaning of public benefit, but I think that I would do nothing.
§ On my next point, there can be no dissent from the view that it is necessary to improve the register, to make it accurate, and to keep it up to date. There is quite a lot of misunderstanding about the purpose of the register. Its role is quite different from that of, say, the companies register. Entry does not of itself confer charitable status. Nor is it in any sense a licensing system. There are a great many exempt and excepted charities—perhaps 100,000 of them —which are not on the register, many of them being subject to some other form of control. The register would be swamped if this were changed.
§ In this context, perhaps I may ask three short questions. Will the database now being designed provide for cross-referencing so that it is possible to discover the charities devoted to similar purposes, however dissimilar their names may be? Is it contemplated that the register, or parts of it, might be sold to advertising agencies to raise a little money? That is a point of comparative detail but it is one that is causing some anxiety. My third question is not a point of detail. What exactly is the present state of play? The White Paper states that steps are being taken to computerise the register. But how far have preparations gone; and when shall we reach this brave new world? I pass now to the submission of accounts.
§ Lord Lloyd of Kilgerran
My Lords, I hesitate to interfere with the brilliant presentation of the noble Lord on this important matter of charities, but perhaps I may ask him this question. Is there not a fourth matter to be referred to? Where is the money coming from and what is the number of employees necessary to bring into force those very important matters which he thinks are so essential in the debate on charities tonight?
§ Lord Allen of Abbeydale
My Lords, I am trying to cover that point as I go along. I take it that the noble Lord has in mind the resources of the Charity Commission. Perhaps the Minister will be in a better position than I am to explain what is in prospect. I shall come to the point about where the money is coming from in a moment.
I was about to comment on the submission of accounts. I do not think that there will be opposition to the general approach of the White Paper as regards requirements graded according to the size of the charity. However, the detailed proposals seem to me to run into the danger on which I touched; that of being too complicated. Some accountants have been rubbing their hands at the thought of every single charity being obliged to conform to the statement of recommended practice worked out by the Accounting Standards Committee. For many of the tiny charities that is simply not on. In any event, I 530 believe that the limits set in the White Paper are too low.
There is need to consider the best way of marking the register so that the public is not misled if a charity simply fails to make the statutory return in time. The White Paper deals vaguely with publicity for such a marking. I hope that the Minister will be able to expand on what is in mind.
In taking up the point that has been made, I ask, above all, whether there will be a sufficient number of qualified staff to look at the accounts and draw conclusions from them when they come rolling in. That would be quite different from what is happening now.
In my quick tour I turn to the question of making a charge to charities, including the proposal that there should be a modest fee of, say, £25 for registration. It sounds so very reasonable and has not been opposed. However, I ask those concerned with charities to have a care. My service in the Treasury instilled into me a concern about hypothecation which leaves me in doubt about whether the Charity Commission would be allowed to keep the money. Even if it were able, the money would cover only a tiny proportion of the cost of the commission. Once the mechanism was in position, the temptation to turn the screws just a little tighter would always exist. If in the end the Bill should make provision for charging I hope that it will also contain a provision limiting the amount by which increases can be made.
It must be borne in mind that there is an anomaly. The large number of charities which need not register would happily continue without paying a penny. I just do not know what would happen in Scotland. Running a charges scheme would also require the diversion of staff. I doubt whether it is worth it. At all events, it would be unwise to count on that as a prime means of increasing the resources of the Charity Commission.
I wish to say just a word about the paragraphs on page 30 of the White Paper dealing with charitable companies. I raise the point because the NCVO tells me that it is unhappy about the large number of requests it receives from charities —some of them very small —which are under the impression that incorporation as a company meets every problem and in particular provides protection against personal liability. I find the relevant paragraphs in the White Paper a little delphic in their drafting. But they take the point that the legal framework for commercial companies is not wholly appropriate for charitable companies. Can the Minister say whether thinking is any further advanced on the possibility of evolving a special form of incorporation for charities and issuing guidance to trustees? Can he confirm that the Government intend to include such a provision in the forthcoming charities Bill and not in companies' legislation of which I believe we have had quite enough?
I turn to the subject of avoidance of abuse. It would be easy to make a long speech on that topic alone but, again, I shall content myself with posing a question or two. Does the Minister see any prospect of the co-operation now permitted with the Inland 531 Revenue resulting in any prosecutions? Have the Government now decided to include in their forthcoming legislation a power for the Charity Commission to exchange information with the DTI and the Serious Fraud Office? In ruling out trustees with criminal conviction, is it proposed that the Charity Commission shall be given access to police records? Will it be added to the list of bodies which are exempt from the law about spent convictions? Further, in that context, will there be special provision about the charities dealing with ex-offenders?
Noble Lords will be pleased to hear that I turn to my last point. Fund raising is a phenomenon with which the 1960 Act was not really concerned. In the intervening years the climate has changed dramatically. I have the impression —perhaps slightly unfair —that at this point the White Paper tends to run out of steam. I am surprised to say that I agree that the street and house-to-house collections legislation needs tidying up, although the details must be examined. However, as regards the rest, I go along with the proposals based on the admirable report of the NCVO on malpractice and fund raising and the findings of the Woodfield Inquiry. I hope that the outcome will not be the necessity of printing on every single Christmas card the percentage of profit going to the charity.
Special problems arise from the new forms of fund raising, especially the television appeals. The Government may be right in believing that in the present state of knowledge it is best to rest on voluntary codes of conduct. The White Paper includes some sensible ideas such as a cooling off period for those so swept away by the emotion of the moment that they telephone generous contributions by credit card. I am in no doubt that the organisers —and I have had some discussion with those in Comic Relief—are alive to the need to maintain high standards. Certainly one would not wish to decry those methods of securing vast sums of money for charitable purposes.
All the same, I find that there is a good deal of anxiety about the fact that there is more publicity for the sums which are raised than for what happens to that money and the expenses involved. I understand that the fund raising bodies are not charities and one cannot help thinking that some of the contributors manage to obtain prime viewing time a bit on the cheap.
The Government are clearly right in saying that developments must be watched. But when the White Paper states that powers will be taken in the Bill to make regulations governing the conduct and accountability of appeals, it will be interesting to see just how those powers are phrased when, on their own showing, the Government have no idea of what they want to do.
I have been able to touch only lightly on a few of the salient points. I am well aware that there are a number of issues that I have not mentioned. For example, there is a possibility of easing the cy-près doctrine; the operation of the 1985 Act relating to small charities; local reviews which require further 532 resources; giving up most of the work of the official custodian; advertising; and political activities by charities. That is quite a list but perhaps some of those matters will be touched on by other noble Lords as the debate proceeds.
For my part, perhaps I may conclude as I began by thanking the Government for presenting the White Paper and affording us the opportunity to discuss it before a Bill is drafted. It heralds the introduction of much needed and, indeed, overdue legislation affecting a not insignificant part of our national life —and a compassionate side of that national life —of which we do not hear over much. It is something which matters quite a lot to quite a lot of people. I beg to move for papers.
§ 4 p.m.
My Lords, the House will be grateful to the noble Lord, Lord Allen of Abbeydale, for giving us the opportunity of this debate today. His interest and expertise in charity matters is well known to your Lordships and, as he said before he sat down, what happens will be of interest to quite a lot of people.
What the noble Lord, Lord Allen, has to say on these matters —and perhaps I may say that he said a great deal this afternoon in a very short period of time—always deserves attention and never more so than now when, for the first time in very nearly 30 years, we have put forward detailed proposals for substantial legislation which will change the position of charities.
The Government have produced a White Paper in which we have outlined the way in which we feel that that change should come about and I look forward to hearing what your Lordships have to say. I believe that the importance of the White Paper's proposals can scarcely be exaggerated. That is reflected in the number of noble Lords who are to speak today. The legislation which we have proposed will set the framework for the supervision of charities for many years to come. In its unspectacular way it will affect the lives of many people. It is, therefore, not just consonant with the special interest which your Lordships have always taken in charity, but entirely right that our proposals should be subject to detailed scrutiny.
The White Paper signals our concern to see voluntary action thrive and to ensure a growing and healthy charitable sector. It is, I think, fair to say that we are committed to the broad outlines of the White Paper and to the basic principles of sharpening the Charity Commission's tools for dealing with abuse; of encouraging trustees to shoulder their responsibilities as stewards of charitable funds; and of increasing public accountability.
We are also committed to an evolutionary approach —both as regards the law and the machinery of supervision. In our view, and I think it will be that of your Lordships, that is much better than a clean sweep.
I think, too, that we have to recognise that matters will not end with this next piece of legislation. The charity world can be likened to an ant hill. It teems 533 with life, is always on the move but is rather unpredictable and ever changing. Unpredictability can be uncomfortable, but we need to make sure that in bringing a little order to the scene we do not constrain the life and vigour of the colony.
Mercifully, charity is not a party political matter, and within the broad framework which I have described, the Government will listen carefully and take on board any suggestions which may help to get the legislation right. It will be quite a significant change. There is no simple preconceived blueprint which will ensure success, and we are anxious to get the result as near right as we can. It is very much in that spirit that, as Minister with particular responsibility for charities, I shall listen to your Lordships today and, indeed, I welcome this debate.
Your Lordships will well understand the difficulties of predicting when legislation will take place. It is our desire to bring in legislation within the lifetime of this Parliament. Beyond that I cannot go, but it may not be too much to hope that our next debate will be on a Second Reading of the Bill.
The reform of charity law, desirable though it is, is an area where one does well to hurry slowly. Charity law is complex and as one might put it, full of "fine print" which is often of vital importance. Proposals, which look at face value simple, can be far from easy to translate into clear and workable legislation. It will, I am sure, be well worth while taking a little time to get the Bill in the best possible shape before it is introduced. There are still areas which we wish to pursue in order to clarify our own minds, and your Lordships' advice is most helpful.
I can assure your Lordships that such time as remains before legislation will not be wasted. In saying this, I am particularly conscious of the need for us to take full account of the views which are coming back from the charitable sector —what one might call the "grass roots" of the charity world. The White Paper, I am glad to say, has been something of a Jeffrey Archer, as those sorts of documents go. It has been a best seller and there is good evidence that it has been widely available.
It is important that it should be widely available because its proposals affect not just those large, fully professional organisations which are experienced in putting their point. They will also affect the smallest charities which may well not be accustomed to commenting on matters such as those which are exposed in the White Paper. It is vital, if the Bill is fully to reflect their interests, that we take the time to listen to what these small charities may have to say.
We must remember that whatever laws on charity we produce charities will always remain diverse and individual. We will not get —nor should we aim for —a row of tulips all of the same height and same colour. Rather it should be a garden full of shrubs and plants of different colours and characteristics and form. That is, apart from anything else, what gives beauty to the scene. The charity world should resemble more a Sissinghurst than a Dutch bulb field.
In expressing the view that small charities need time to collect their thoughts, I should not wish to 534 give the impression that the charitable world has been quiescent since the publication of the White Paper. Far from it. We have been immensely heartened by the number and the quality of the responses which we have received, and by the care which has clearly gone into preparing them. Some have even taken the trouble to come and see me for which I am very grateful, and I should like to take this opportunity of thanking all those who have contributed to the discourse and to assure them that we shall consider and, indeed, are already considering the points which they have made.
While there have, of course, been criticisms I am happy to say that the great majority of commentators have welcomed our proposals as being balanced and well considered.
So, what are those proposals? I said at the beginning that we were sharpening the commission's tools against abuse. When I said that it might have been more accurate to say that we intend to give them tools. The most basic, and in many ways the most important of those tools, is information. Without that, one cannot do very much. As we all know and we all regret, the commission's register is incomplete and extremely out of date. What we propose, and what the legislation will enable, is, first, a complete spring clean. Once that is completed computerisation will provide the means for the register to be annually updated. The result will be that, for the first time since the register was started, it will serve the commission and the public in the way it was always intended. For the commission, it will be the driving shaft of their supervisory machine. For the public, it will be a rich quarry of accurate information.
No-one should underestimate the size of the task. It can, I believe, only be compared to that sterling and patient work carried out by the Brougham Commissioners before the 1853 Act which established the Charity Commission. An accurate and up to date register, with the routine provision of basic information is the fundamental requirement. It will enable the commission to identify cases of risk and nip abuses in the bud. Where that information is not forthcoming it will also give the commission automatic warning that something may be amiss. But once the commission has information which leads it to expect abuse it must have the means to act quickly and flexibly in defence of charities. Our proposals will both add significantly to the commission's powers and enable them to be used more readily.
We believe it is consistent with the added stature which the commission will acquire as a result of this legislation that it should for the first time have powers concurrent with the Attorney-General to take court action to correct abuse and protect charity property. This will undoubtedly strengthen the commission's hand in dealing with those who are abusing charities.
Legislation is not just about the Charity Commission. The commission cannot do everything. Trustees must also shoulder their responsibilities. This is the second broad principle which I mention as being a fundamental part of the legislation.Trustees 535 must do this not just because they are the people in charge but because it is necessary if the commission is to make full use of its new machinery and its new powers. The commission should be enabled to focus its resources on what only it can do. Consistent with this aim we intend that in the future trustees should, in most circumstances, have greater freedom to deal in land. They should also take charge of their investments.
Computerisation and the return of charities' investments present a golden opportunity to harness the initiatives already occurring in the charity world to make far better use of funds locked up in local charities throughout the country. The first class principles laid down in the 1985 Act —as a result of an initiative taken in this House —are to be extended, by simplifying the procedures for trustees and by raising the financial limits. Taken together, these measures should result in substantial increases in efficiency at the grass roots and should accelerate the pace at which resources which might otherwise be left idle are released for beneficiaries.
Our third guiding principle is increased public accountability. Our proposals aim to introduce, for the first time in charity legislation, basic standards of good accounting practice. The proposals will also enable members of the public to obtain copies of accounts directly from charities, and all registered charities will be required to send accounts to the commissioners each year. Together with the annual report this information should give an accurate and indeed a vibrant picture of the affairs of charities.
Somewhat distinct, but nevertheless of the highest importance, is the question of fund raising. Here we are proposing to follow the admirable lead given by the Scots in Section 119 of the Civic Government (Scotland) Act 1982. This will entail a clear-out of some rather elderly and confusing legislation and its replacement with a single, comprehensive —and, we hope, more easily comprehended —set of provisions. This will be complemented by a number of measures which are designed to curb the activities of unscrupulous professional fund raisers.
In all this we are concerned not to burden trustees unnecessarily. We have tried hard to steer an acceptable course between freedom and accountability. On the one hand, there must be proper control by the Charity Commission; on the other hand, charities must be free to develop and do business without unnecessary interference.
We understand the worries, which have been expressed, that trustees of small charities in particular may find their new freedoms a little daunting and their new responsibilities somewhat onerous. I think that I can offer substantial comfort —but not too much. The fact is that responsibility is the essence of trusteeship. Freedom inevitably brings responsibilities in its wake. There cannot be proper monitoring of charities without the provision of more and better information to the commission. Monitoring, after all, is designed to ensure a degree of general public confidence which will benefit the individual charities themselves.
536 Having said that, our proposals go a long way towards recognising the position of small charities. The accounts, which they will have to submit annually, will, in the vast majority of cases, be very simple. The annual report on their activities need not be long and involved. The procedures for selling land will be straightforward, and will be well within the capacity of the average trustee.
For those who may have, for the first time, to manage without the help of the Official Custodian there are available a number of valuable, safe and fuss-free investments with almost all the advantages which the Official Custodian is able to offer. I think —and I hope —that small charities will rise to the modest challenge which the new legislation will present to them and that they will grasp the new opportunities which will be open to them.
Certainly there is room here for trustee support and education, and I have been encouraged to learn of a working party which has been set up by the National Council for Voluntary Organisations —an organisation to which the noble Lord, Lord Allen of Abbeydale, referred. The purpose of the working party is to look at ways of promoting efficiency and effectiveness within the voluntary sector, including the training of trustees. The chairman of this group is the noble Lord, Lord Nathan, who follows in an honourable tradition. We are advised that a report will be issued early in the new year, and welcome this as a step towards equipping trustees to rise to the challenge of trusteeship. I only hope he does not confuse the methods of dealing with trustees with the evidence he received on murder and life imprisonment.
The White Paper rightly acknowledges that, while the new legislation will be vital, it will need to be complemented by a more active and efficient Charity Commission —one which is able to give a better service to charities.
I should like to pay tribute to the immense efforts which the chief commissioner and his staff have made in order to fit the commission for its post-legislative role. They really have been Herculean. The Charity Commission has undergone in the last two years quite enormous changes and they have had to keep their wits about them not only to effect the changes but to continue with the day-to-day administrative work at the same time for which they exist in the first place. They have tackled a daunting task with energy and enthusiasm.
Two new part-time commissioners have been appointed and are already making a valuable contribution. The commission's management has been restructured so that business can be conducted more efficiently. The department has acquired an accountant and a new head of monitoring and investigations with long experience in Customs and Excise. A large and impressive programme is well under way for the introduction of information technology and for the computerisation of the Register of Charities.
The noble Lord, Lord Lloyd of Kilgerran, made a somewhat precipitous intervention in the speech of the noble Lord, Lord Allen of Abbeydale. He invited the noble Lord, Lord Allen, to ask a question. The 537 noble Lord, Lord Allen, did not wish to ask the question, but as the noble Lord, Lord Lloyd of Kilgerran, had already asked it I thought it appropriate for me to answer; but I see that the noble Lord is no longer here!
Nevertheless, as he is an assiduous reader of Hansard I am sure that he will be interested to know —because he asked what the staff figures for the Charity Commission were —that in January 1988 there were 320 staff; there are now 420 and next year there are likely to be 500. The noble Lord, Lord Allen of Abbeydale, asked whether there will be enough qualified staff to examine the accounts. The answer is that the commission has an accountant who is already training other staff. Another will soon be acquired and a new head of monitoring and investigations has also been engaged. He is a former employee of Customs and Excise and is, of course, expert in this whole area. The number of staff devoted to investigating mismanagement and abuse has continued to rise. A little over two years ago there were only six such staff. When the new chief commissioner took office in early 1988 there were 14. Now there are 40, and the number will rise. That is, I think, by any standards a substantial achievement. I hope that answer satisfies the noble Lord, Lord Allen of Abbeydale, and also the noble Lord, Lord Lloyd of Kilgerran, when he reads it.
As if that were not enough, the commission has also found the time to open a new regional office in Taunton. That will relieve pressure on the present accommodation in London, and it will, in time, make a significant contribution to the increased efficiency of its operations.
One does not alter overnight an organisation of the size, composition and importance of the Charity Commission. That is rather like changing the direction of a battleship by giving it a poke with a boathook. It takes time. I know that your Lordships will be concerned that the Charity Commission should be given enough funds to do its work. The noble Lord, Lord Allen of Abbeydale, asked, in a slightly waspish way, whether the Government were going to give enough funds because he implied that the Charity Commission had not been given enough in the past.
My Lords, I thought I heard my noble friend Lord Whitelaw say that they had not. Maybe they have not, but perhaps I may tell him what the Government are going to do because we are looking towards the future and not back to the past. Last year the Charity Commission was given £7 million and this year it will receive £1 I million. Next year it will have £16 million. So in two years the funds put at the disposal of the Charity Commission will have more than doubled. I do not know whether that will satisfy the noble Lord, Lord Allen, or my noble friend Lord Whitelaw, but whether it does or does not, I am sure they will agree that it is a very substantial improvement indeed.
A large proportion of this money is necessary in order to enable the commission to embark on the use of new technology; to computerise the registration of 538 charities and their operation which of itself is a mammoth task. The noble Lord, Lord Allen, asked whether there would be a cross-referencing on a charity database. That will be done as one of the benefits of the new technology if it is possible to carry it out. He wanted to know what the state of play was regarding the database. The first stage is complete; the second stage begins next year and the whole programme will be completed in four years.
The noble Lord also asked whether the contents of the register will be sold. I can assure him that it will not be sold to advertisers, but we have in mind to offer some access to the register to payroll giving organisations.
At a time when most people would say that the Government have not been noted for their largesse in public spending, I hope that your Lordships will think that the funds that the Government have put and intend to put at the disposal of the Charity Commission underline the importance which the Government attach to the changing role of the commission.
Charities are an important part of our national life and they are likely to become more so as new techniques, new technologies, new methods and, we hope, a new desire to give more, increase. It is important that those who give of their charity and those who work in the charities should know that what is done and the way in which it is done is carried out in a manner that is beyond reproach. I hope that when the time comes the advice that we shall have received from all quarters, including from your Lordships who have consistently and traditionally taken such an interest in charities, will enable us to prepare a Bill that will prove not only acceptable to Parliament but of value to our way of life for many years to come.
§ 4.23 p.m.
§ Lord Mishcon
My Lords, I have the opportunity of paying three tributes. The first is to the noble Lord, Lord Allen of Abbeydale, who is known in this House as an introducer of interesting debates and as a valuable contributor on the subject of charities. The second tribute was paid some time ago but I pay it again. It is to the Woodfield Report which has been very largely followed in the recommendations made in the White Paper. The third tribute I pay to the Minister who has just sat down for his picturesque metaphors of which I noted only a few. He referred to "anthills', "tulips", "Dutch bulb fields" and "sharpening tools" —all in the course of one speech dealing with the not always attractive subject of charity law. He also referred to Mr. Jeffrey Archer. I am sure that if he had known I might have received some instructions to thank the noble Lord for that reference.
My Lords, I used those metaphors knowing that that would be one way of retaining the noble Lord's attention.
§ Lord Mishcon
My Lords, if that was the only method of attracting my attention to the noble Lord's speech I would not have been so courteous to him as I always wish to be.
539 It is right and proper that we take our measure of the subject before the House and our discussion of the White Paper by referring to a couple of figures mentioned right at the beginning of the document. The first is that this industry of charity runs to a turnover in the charitable sector of some £13 billion. I wish to pay my tribute in due course to what has been achieved by the commission with very little funding and with a very small staff to deal with the work. I believe that was indicated through an intervention by the noble Viscount, Lord Whitelaw, who knows so much about the past work of the Charity Commission. I am sure that he also knows about its present work.
The second figure given at the beginning of the White Paper is that a charity is registered every 30 minutes of the working day. From that one gets an appreciation of the great volume of work that has to be done and the little time there might be for proper supervision, inspection and checking of accounts. I shall come to that matter in a moment. The noble Lord, Lord Allen of Abbeydale, with his usual care, read one of our national newspapers assiduously and discovered an error in its supplement on charities published last Tuesday. Very correctly, he told your Lordships that the newspaper had referred to a charities Bill at present passing through Parliament. That was an inaccuracy.
But another section of the supplement contained something that we should take into account very carefully when thinking in terms of charities, their growth, government contributions from the public sector and what is happening in the private sector. Amid words of caution the supplement quoted figures which are of some importance when we are considering charities generally and what is likely to happen in the years ahead unless there is an alteration. Attention was drawn to the fact that until now local authorities have been great contributors to charities and charitable work.
I am endeavouring to keep away from political theory or argument in an address on a non-political subject. But there is a great amount of fear and concern that the introduction of the community charge may adversely affect the contributions that local authorities make to charitable work and organisations. As The Times supplement pointed out, there is evidence that statutory support to the voluntary sector is falling off. There is a growing number of charitable organisations making demands on the state. We are told from a very reliable source of both the rate of increase of government funding running at £290 million a year and funding from non-departmental government bodies totalling about £920 million a year. I point out that £500 million of that figure of £920 million comes from the now defunct community programme. The rate of increase on both sets of figures has slowed to a trickle.
The private sector is always very generous to charities according to our tradition in this country but its contributions are also slowing by virtue of a growing suspicion that the more it gives the less the state gives. That is extremely material and a matter obviously to be taken into account.
540 In that context I should like to say a few words about what the Minister described very correctly as the ideal. He said that we should not constrain the private sector. On the subject of constraint, it is necessary to make the point that we must not be too legalistic. We must not be too restraining in our regulations on the private sector. That would be discouraging.
Perhaps I may give a brief example. There are many generous settlors who give quite a slice of their interests in private companies or even in public companies where they have a substantial interest. They settle those shares on a charitable trust which they create. There is an ordinary law in regard to trustees. Under the Trustee Act trustees must look at the question of diversification. If they feel that it is right and proper to sell shares, because they can get a little more by way of income or whatever it may be, they ought to do it.
A great many benefactors will be discouraged if that rule is taken too literally, be it by the charity commissioners or by the courts, and we put into our legislation, our regulations or our order of things a completely legalistic and technical way of looking at that kind of generosity.
I wonder whether I may take up the question of resources. I though that the intervention of the noble Lord, Lord Lloyd of Kilgerran, was dealt with aptly in his absence. I notice that there is a companionship, if I may put it this way, in the absence of the whole of the Front Bench at which I am looking at this moment. The point was a proper one to raise. The noble Lord, Lord Allen, had talked about resources at the beginning of his speech. I took one look at the figures given by the noble Lord. They sounded terribly impressive when his organ-sounding voice recited them —320 staff last year; 420 increasing to 500 this year. He quoted the figure of £7 million going up to £11 million and, it is to be hoped, to £16 million next year.
Then I took a look at the new duties recommended by the White Paper. I shall quote a few of them. They are recorded in the annex to the White Paper which summarises the recommendations of the Woodfield Report. Recommendation No. 4 says:The Commission should set up a top management board".Recommendation No. 5 says:The Commission should, in conjunction with the Treasury, consider urgently the findings of the forthcoming information technology strategy study, according particular priority to the introduction of a management information system".Recommendation No. 6 says:There should be more secondments of staff between the Commission and other departments; and the Commission should examine the possibility of exchanges with charitable organisations".Recommendation No. 11 says:The Commission should arrange suitable training for those staff who are engaged in examining annual accounts".I pause for a moment. With annual accounts being compulsory, and with there being one registration every 30 minutes of the working day, I just wonder about the ability to check those accounts, to seek information and to see whether anything is going wrong. Was I right —I could not have been —when 541 I heard the Minister talk with pride about there being one qualified accountant? He must have meant very many more. If I heard incorrectly, I am sure that he will give a figure. I thought that he would give a figure of 100 accountants, bearing in mind what the accountancy department is expected to do.
I have not yet finished. Recommendation No. 25 says:The Commission should continue to review the presentation and content of their leaflets, drawing up a programme to this end".That recommendation comes under the section on local reviews and the Charities Act 1985. Recommendation No. 29 says:The Commission should as soon as practicable establish a local charity liaison section to promote and assist future local review work".I shall not go on with this recital. However, the recommendation would require virtually the setting up of a government department. And it is right and proper that it should.
The tribute I said I was going to pay to the Charity Commission I pay now. As a legal practitioner I have had the privilege of being in touch with the commission over the years. I want to tell the House that I have met with nothing but courtesy every time I have asked for assistance and every time I have asked to discuss anything with the charity commissioners. I am talking of the chief charity commissioner down to the humblest of the staff. However, every time I have been in that building I have wondered how the staff manages to cope with the work. If we are dealing with the figure which the Minister gave today, in regard to resources, personnel and money, I am saying to the House that, to my untutored mind, it does not seem enough.
I stress to the Minister and to the House that it is not the quantity of staff that is important but the quality of the staff. Over the years I have noted a turnover in staff which has made me feel very dispirited. I am not quoting information given to me by any officer of the Charity Commission. I have received none. I have received the impression that many members of the staff go there for a short period of time in order to gain experience. They then go on to more highly remunerated posts elsewhere. We must not repeat this mistake. If we want the kind of Charity Commission that we are entitled to have and that charities are entitled to have, especially if we want them to carry out the duties that are mentioned in the White Paper and the Woodfield Report, we need high-quality staff who are properly paid and will remain in the post. That is an important point on the question of resources.
I was delighted as a lawyer to see the recommendation that there should be no statutory definition of charity. This point was mentioned by the noble Lord, Lord Allen of Abbeydale. The noble Lord referred to—I know that it was only a slip of the tongue—a legal definition of charity. In fact, a legal definition of charity is embedded in our 1602 statute and in the well-known judgment, under four headings, of Lord Macnaghten. It would be wrong if we got rid of the valuable stream of precedents that have grown up over the years. Our courts have been flexible and have gone with the mode and with the 542 different social needs of the moment. We have ended up with rational and sensible decisions in regard to whether or not a charity comes within those famous four headings.
I was a little less than rejoicing when I read that section of the White Paper which deals with how we ought to treat some of the religious cults, as they are called, where a great deal of harm is experienced in family life and in the development of young children. Of course, the White Paper discusses the matter. But I had hoped that there would be a better conclusion other than a rough subsequent finding as to whether it is for the benefit of the public that these organisations exist. I wish I could give your Lordships a better alternative.
I hope that other speakers will be able to make a more constructive contribution to this debate than I have. I also hope that we do not leave the debate today without someone finding a better way of dealing with some of these religious cults, although I perfectly understand how each and every one of us in our tolerance would want to say, as I believe a famous judge once said, that any religion is usually better than having none at all.
I promise your Lordships that I shall now deal, finally, with the question of fund raising. I was delighted to see the recommendation that funds collected by fund raisers should be passed over, without any deduction, to the charity for which the funds have been raised thus leaving it to the charity concerned to pay the fund raisers, rather than the deduction taking place before the moneys go to the charity. That seems to me to be very proper.
However, there is just one matter that I want to raise before I sit down —and I promise your Lordships that I shall do so shortly. From time to time I have come across members of staff from hospitals and other charitable institutions who have told me that they have found out —but, unfortunately, too late to be able to do anything about it —that people have been visiting houses and making completely unauthorised public collections on behalf of what they say is their principal —namely, the hospital or the institution involved —and that the institution or hospital concerned had not seen one penny of the money collected.
I hope that there will be very near co-operation between the charity commissioners and the police in this matter. Moreover, when such matters are discovered I also hope that people will realise that it is a public duty to point them out to the authorities. I further hope that the regulations in our law will always make it extremely unprofitable, if I may put it in that way, for people to indulge in this kind of cruel fraud.
Perhaps I may, as did the noble Lord, Lord Allen of Abbeydale, broadly welcome the White Paper. I hope that it will be the parent of a Bill which we shall be able to welcome in this House.
§ 4.43 p.m.
§ The Lord Bishop of Chester
My Lords, I am most grateful to the noble Lord, Lord Allen of Abbeydale, for introducing this debate and for giving us the 543 opportunity to discuss the White Paper now before us. I am also delighted to follow the noble Lord, Lord Mishcon, because of the two matters which I wish to raise, the second one concerns religious cults.
However, I shall first draw your Lordships' attention to the anomalous position in relation to the law of charity of a small, and by definition a non-vocal, group of individuals. I refer to the contemplative religious communities which are to be found primarily in the Roman Catholic Church and to a lesser extent in the Church of England. There are actually less than a hundred of these communities in the whole of England, Scotland and Wales but the importance of the issue which I seek to raise is not thereby diminished.
For many years the matter has been the concern of the Churches Main Committee, a body representing, among others, the mainstream Christian Churches, of which the right reverend Prelate the Bishop of London is chairman. He very much regrets that he cannot be present in the House today. As your Lordships will be aware, the Churches generally enjoy charitable status —and I think I should emphasise the word "enjoy" —under the law, and the fiscal benefits which this brings, since the advancement of religion has traditionally been regarded as a charitable activity.
Integrated with the organisation of the Church of England and the Roman Catholic Church are communities of contemplative monks and nuns whose contribution to the spiritual life of these Churches lies particularly in the support and inspiration which they give to other members of their church whose work takes them out into the world. A very small percentage of these communities enjoy charitable status by virtue of the public benefit which they render and which is more easily demonstrable than that of their primary vocation of intercessionary prayer. But the law of charity, as interpreted by the courts some 40 years ago, denies the contemplative communities the charitable status enjoyed by the body to which they belong. The fact that they are in a special position was recognised by the Government in the provisions made in the Local Government Finance Act 1988 regarding their exemption from payment of the personal community charge.
I readily accept that as individuals these people will have taken a vow of poverty and all that that entails; but it is as a community of which they are members that the present law of charity discriminates against them, as I think your Lordships will agree, so unreasonably. It leaves them in a sort of limbo where they have no legal standing. The disadvantages of this anomalous position are manifold: for example, the ownership of their property is uncertain and they suffer tax disadvantages whereby not only do they not have the advantages of exemption from tax as a charity but they also bear a heavier burden of tax than they would as members of the public generally.
Historically, a trust which provides for the support of those engaged in saying masses or private prayer was always regarded as a valid charitable purpose. 544 It was at the time of the Reformation that the climate of opinion changed because of the suspicion of abuse. Today the place of prayer is strongly accepted in all the mainstream Churches. The climate has certainly changed. This is certainly not a marginal matter; it is now central.
I am told that the matter is already under discussion with officials of the Home Office in the context of the comments made by the Churches Main Committee on the proposals set out in the White Paper before us today. My plea to the noble Earl, Lord Ferrers, who will reply to the debate is for him to recognise the anomalous position of these religious communities and to undertake to consider the extent to which changes in the law of charity stemming from this White Paper may be made to accommodate the removal of this anomaly which causes considerable concern and distress to the Churches affected.
I turn now to the question of charitable status for new religious movements. The General Synod's Board for Mission and Unity recently published a report entitled New Religious Movements. The General Synod commended the report for discussion. It outlines the Church's attitude to new religious movements and gives details of what the Churches concerned have been doing in response to the widespread concern about the activities of new religious movements in this country. Legislation has to come from Parliament, but the actions outlined in the report show that the Churches are not just asking others do do something about the problem; they have taken important steps themselves.
In conjunction with the Home Office, the Churches have helped to set up INFORM, which provides the objective information that is vital in this field and puts inquirers in touch with members of its network for counselling or advice. The most reverend Primate the Archbishop of Canterbury is one of INFORM's patrons. He addressed a recent seminar organised by the agency, where he said:INFORM is the place where we can find information on the new religious movements. It provides that truthful information store which is literally invaluable for those of us who try to lend help and support to those who are distressed by their encounters, or those of their loved ones, with new religious movements. I know … that INFORM is in fact achieving what it sets out to do. It has helped many people and it certainly deserves continued support".Anglican diocesan bishops are also appointing a Church network of advisers of new religious movements in consultation with other Church leaders at the request of the British Council of Churches and on behalf of all the Churches. These Church advisers cannot be impartial about new religious movements; they are mostly Christian ministers advising other Christian ministers and members of their flocks. But the objective information which INFORM is able to supply as an impartial agency is invaluable to them and, indeed, to all others.
It is on the basis of the action which the Churches have already taken that on Tuesday 9th November the General Synod of the Church of England felt able to request Her Majesty's Government to take action with regard to the charitable status of the new 545 religious movements. It passed the following motion by 205 votes to nil:This SynodThe Church of England could not support legislation which singles out one religious movement by name to exclude it from charitable status, which would appear to be an arbitrary act; nor could it support legislation to remove charities from the register on the grounds of their beliefs. Of course we disagree profoundly with the beliefs of the new religious movements. We do not believe that one faith is as good as another; but we support freedom of belief, the right to believe what one wishes, and do not believe that the courts should be asked to adjudicate on matters of belief or rule that one set of beliefs is better or truer than another.
- (i) welcomes the publication of the Government White Paper: Charities —A Framework for the Future, and encourages Her Majesty's Government to make explicit, and if necessary to strengthen the existing powers of the Charity Commissioners to remove a Charity from the register where there is evidence that it is in acting in pursuit of its objects in ways which are not for the public benefit; and
- (ii) commends for discussions GS Misc 317 and especially paragraphs 29 and 30 as a draft code of practice, contravention of which might constitute evidence that a religious body is not acting for the public benefit".
It is not the beliefs of the new religious movements, bizarre as some of them may be, which cause widespread public concern, but their activities. It is on the basis of their activities —their behaviour —that they should be judged so far as concerns charitable status. The General Synod welcomes the White Paper and encourages Her Majesty's Government to make explicit and, as I have said, to strengthen if necessary the existing powers of the Charity Commissioners to remove a charity from the register. Evidence will be required; otherwise such a removal from the register would be an arbitrary act.
Perhaps I may suggest and share with your Lordships some of the items in the code of practice which pins down the matter a bit further. For instance, in the draft code of practice the board deplores inviting people to an event under false pretences, without explaining the true nature and purpose of the event; raising money under false pretences, or not making clear the purposes for which money will be used and the name and nature of the organisation for which it is being collected. Those of us who have been pestered at American airports will know just what that means. Such behaviour is not confined there; it is becoming common at Oxford Circus.
The board deplores using unfair or immoral means of persuasion, such as "heavenly deception", "flirty fishing", sleep deprivation, food deprivation, hypnosis, or any form of emotional, psychological or spiritual blackmail; serious discussion with minors without the knowledge of parents, guardians or school teachers, and refusal or unreasonable hindering of access to adherents or prospective adherents. It deplores failure to be publicly accountable as to the use of finance and resources where money has been raised from public sources. There are other items in the code of practice, but I 546 shall spare your Lordships and not: give further details.
The General Synod motion requesting that legislation and commending discussion was passed, as I said earlier, unanimously, and the synod therefore hopes that Her Majesty's Government will consider that point seriously.
Perhaps I may add a postscript. I am sure that many of us can illustrate from our experiences of charitable law how much of an overhaul is needed; not least the way in which outdated and irrelevant rules need to be altered in some charities.
A few weeks ago in my city of Chester the trustees of an educational charity, which had operated a building since 1933, were stunned when they received a ruling from the Charity Commission. That building had, for not more than 12 years in the 1920s into the 1930s, been a rifle range. Since then, it has been operated by the educational charity as a means of support for education in the city. Recently it was burnt down, and the site has been sold. The amount of money raised was sufficient to meet the crying and urgent need for a major school hall which the educational charity could supply to the Church of England secondary school which does not have a hall. The Charity Commission has ruled that it should be used to rebuild a rifle range, 56 years after the site was last so used. I am sure that that is the law, but in that case the law is an ass or even a dangerous ass because rifle ranges are not popular in the North-West of England at the moment after the murder of a policeman on the M.62.
I illustrate what many other people may illustrate from their experiences, and thus for those reasons as well as the other matters that I have raised I welcome the White Paper.
§ 4.55 p.m.
§ Viscount Whitelaw
My Lords, I am sure that noble Lords in all parts of the House will be grateful to the noble Lord, Lord Allen of Abbeydale, for initiating the debate on charities and for his excellent speech, if I may humbly say so, which outlined clearly the whole problem. He has considerable experience of the subject both from his distinguished career at the Home Office and thereafter his constant work in the House for charities. I cannot match his experience or his knowledge.
My reason for intervening in the debate stems from an increasing involvement in the world of charities. I shall limit my remarks to my short experience. For that reason, I shall not follow the right reverend Prelate in his important remarks about the charitable status of religious movements. I shall leave others to deal with that subject.
My experience started when I was Home Secretary. I learnt to appreciate the problems of the Charity Commission, which is expected to carry out an important supervisory role while totally lacking the necessary resources. If my noble friend Lord Ferrers heard my characteristically loud comment, it stemmed from a guilty conscience. I failed when I was Home Secretary to achieve the resources for the Charity Commission which I knew it needed.
547 My discussions with the noble Lord, Lord Allen of Abbeydale, and his friends when I was Leader of your Lordships' House merely confirmed all my worst fears. Since I left the Government, I have succeeded the noble Lord, Lord Goodman —an almost impossible task in any way in any circumstances —as chairman of the Council for Charitable Support. In that capacity I have come face to face with the importance of helping many charitable organisations to promote charitable activity and charitable giving—surely an essential feature in any civilised society.
Once again, I have realised the vital role of the Charity Commission as a supervisory body in providing the necessary confidence to potential donors. That aspect of its work should never be forgotten. Therefore, I have greatly welcomed recent developments. Sir Philip Woodfield was a tower of strength to me in Northern Ireland and the Home Office. As a result, I was not surprised when he produced an excellent report which has been widely welcomed by charitable organisations and by your Lordships' House this afternoon.
The Government, and in particular the Home Office with my noble friend Lord Ferrers as the Minister in charge, deserve great credit for producing a White Paper generally so supportive of Sir Philip Woodfield's conclusions about the best regulation for charities. I hope that your Lordships will give the White Paper a warm welcome. We are promised a Bill based on the White Paper. Contrary to what were well known to be my normal efforts to keep the parliamentary programme in control, which I equally always failed to do —
§ Viscount Whitelaw
My Lords, thank you. I trust that that Bill will be in the next Session of Parliament. No doubt many suggestions will be made in the debate about possible improvements for when the White Paper is turned into a Bill. I want to stress just one point which I regard as of paramount importance, and which will arise after the Bill has become an Act of Parliament. The noble Lord, Lord Mishcon, has already referred to this aspect of what I want to say.
The whole purpose of the Bill will be to make sure that charities are properly supervised, so far as that is humanely possible, and to make sure in that way that improprieties do not occur. This is the challenge facing the Charity Commission in an increasingly important field if it wants a solid foundation for increased charitable giving in this country. This challenge will be met only if the Government provide the necessary resources to enable the Charity Commission to perform the duties laid upon it by an Act of Parliament.
The noble Lord, Lord Mishcon, outlined far better than I could many of the duties that will thereby be involved, but they will be the duties which we in Parliament will have put upon the Charity Commission when that Act is passed. If the necessary resources are not then given, the Charity 548 Commission will not be able to perform the task put upon it by Parliament and that will be a very great tragedy indeed.
I turn now from the regulating base to the promotion of charitable activities and charitable giving. In this consideration I start with the realisation —I think it is an important one —that many people in all walks of life give generously of their time and money to charitable organisations.
Against that background we have to evaluate two rather contradictory pieces of evidence. On the one hand, there are occasions when some tragedy or appeal touches the imaginations or the feelings of the public. Then their generosity can be quite remarkable. On the other hand, the general level of giving is surely low by any standards. The Charities Aid Foundation believes that about 80 per cent. of adults make donations during the year, but estimates an average donation of a mere £2 per month. The strange contradiction between these two facts needs to be studied by charities on their methods of appeal and by the Government when deciding on their direct involvement. The Government provide incentives to individual giving, and as has been said, government departments individually and local authorities give direct contributions to various charities. I believe that these two roles both require examination.
The Government's comparatively new pay roll deduction scheme should be welcomed. I hope it will develop as a means of systematic giving —and systematic giving and regular giving are very important factors which we much lack at the present time —for employees in the firms that operate it. I believe that it needs every encouragement. At the same time government concessions to charitable donors contain anomalies which should surely be removed when the opportunity occurs. For example, there is no limit on covenanting but there is a limit of £480 on payroll deduction giving. Also companies can obtain tax concessions on single gifts; individuals for some strange reason cannot.
I hope that my right honourable friend the Chancellor of the Exchequer will instruct the Inland Revenue to review these areas of differential treatment with one simple, general objective —which it must surely be in the interests of the Government to promote —to encourage individuals to give generously. Some of these anomalies are encouraging one section but inhibiting another at the same time.
It has been reported that there has been a scrutiny by the Government of direct grants to charities by government departments and that this will be published soon. I hope that the Government will take the opportunity to set out their general policy on the level of direct support which they plan to give to charities. Until they do there is always a danger that companies and individuals may feel that, if they give a lot more to charity, the Government themselves may then decide to withdraw. Of course this also applies to direct departmental grants to particular charities.
It would actually help to clear the air if the Government would promote discussion, which should address some fundamental questions. For 549 example, is there satisfactory co-ordination between government departments on the grants which they individually give? My personal experience of government over a good many years would lead me mildly to say that I doubt whether there is.
Secondly, what are the principles underlying support for particular charities with the taxpayers' money? My suspicion is that the whole process has developed as a somewhat haphazard and uncoordinated process. I do not blame governments over the years for this, as to some extent it is inevitable. But surely the scrutiny is a good moment to look at the Government's direct charity contributions as a whole and to decide how they should be handled, why they ever started, whether they should continue and whether we will find that some government departments are actually duplicating their contributions. It may very well be so.
To sum up, therefore, it seems to me that this White Paper on charities and the proposed Bill provide us with an opportunity to study the whole field of charitable giving by direct government and local authority contributions, by government incentives to companies and individuals, and indeed the work of the charities themselves in their methods of appeal for public contributions. I believe that all those who are interested in charities should seize this excellent opportunity. If we do, then we will be showing our determination to increase charitable giving to a level appropriate to a prosperous and civilised society.
§ 5.7 p.m.
§ The Earl of Longford
My Lords, it is a privilege, and in these circumstances a great privilege, to follow the noble Viscount, Lord Whitelaw. According to my reckoning there were nine Leaders of the House and if the noble and learned Lord, Lord Hailsham, were not leaving the House now I would invoke him in what I am about to say. I see that he has been kind enough to take his seat again, and I should just like to say that I am sure he, as well as the other absent previous Leaders of the House, will agree with me that there was never a more popular or successful Leader of the House of Lords than the noble Viscount, Lord Whitelaw.
Speaking as one who never got anywhere near the House of Commons owing to the obstruction presented by the noble and learned Lord, Lord Hailsham, the noble Viscount, Lord Whitelaw, struck me as more a House of Lords man than a House of Commons man, which is very acceptable to some of us who never got to the House of Commons. I hope he will accept that as a kind of compliment.
I hope he will also accept this as a compliment. He is regarded in many eyes as the acceptable face of Thatcherism, and it was said that if only he had managed to stay in the Government there would not have been any need for this Sir Galahad to step forward. That again is a matter of argument. But be that as it may, and we are discussing other matters today, what he has said is very noteworthy.
550 I speak partly out of admiration for the noble Lord, Lord Allen, and the initiative he has taken and partly because I want to explore a little further an aspect —quite a large aspect —of the controversies which surround this issue. I have had beneficial conversations with an organisation called Strategy Europe, of which my friend Peter Thompson is a deputy director. I have paid tribute to him before, as having done more for mental health than any other layman in this country. But be that as it may, it is about to produce an important document, and we must await that document before discussing it, about the issues that arise as soon as you begin to ask what is legitimate activity for charities and what is not.
I hasten to say —I shall not repeat it yet again; I have said it in previous debates on charities —that I am happy to think that it was 40 years ago when as a Member of the then Government I proclaimed the devotion of the Labour Party to voluntary action, which has been reaffirmed by the noble Lord, Lord Mishcon, not only today but on other occasions. I need not pursue that matter further.
I shall now turn to the question of the political activities of charities. That is obviously a grey area. We are talking about politics in the sense of party politics and obviously charities must not become involved in that kind of activity. On the other hand, if one is talking of social change, it is almost impossible to conceive of any charity involved with social questions which is not interested in changing the situation. I have been involved with two flourishing charities involved in social change or social assistance. I have never been concerned directly with any kind of housing trust, but anyone who is would wish to see better housing laws. It is impossible therefore to draw a very definite line here. I shall take an example from one area to illustrate the admitted difficulty of the issue. This issue can never be finally disposed of, but I do not think it has been tackled fully enough in the White Paper.
The Matthew Trust is a pioneering group concerned with special hospitals and the aftercare of mental patients and victims of violent crime. It was started by the same Peter Thompson that I mentioned earlier. The Charity Commissioners cannot doubt that the hospital is carrying out good work, but the question is: how far is it allowed to promote certain objectives which may be thought to be borderline? The trust believed that:the care of patients in the special hospitals—at Broadmoor, Moss Side, Park Lane and Rampton —would be best served by all nursing staff belonging to the Royal College of Nursing rather than the Prison Officers Association".That is an arguable point and I am not taking sides on it. There is much to be said on both sides of the argument. In the abstract one could say that the staff in such hospitals should belong to a nursing association. On the other hand, the prison officers have over the years carried out very good work and it could be considered wrong to try, as it were, to take that away from them. There are arguments on both sides but I am not concerned with the merits of that case. However, the Charity Commissioners 551 considered that the trustees should be rebuked on the grounds that:Such an interference in the legal right of employees to choose for themselves the trade union which they consider best able to promote and protect their interests, is not, in our view, capable of being construed either as a main charitable purpose or as a legitimate pursuit ancillary or incidental to the attainment of a charitable object, and we accordingly advise the trustees of the Trust to discontinue their campaign".I need not recount the argument that followed. However, in the end a kind of compromise was struck. Such a situation shows the difficulty of the issue. From reading the White Paper I do not think that that issue is fully recognised.
I shall not detain the House for more than a few moments longer, but I must say that I feel that the more the Government back out of what many of us regard as their proper responsibilities for social welfare and the more they, so to speak, pass the buck to charitable bodies, the more this issue will arise. It is an acute issue and cannot be dodged. While it will never be settled and finally disposed of, I hope that much more thought and attention will be given to it by the Government in the time to come.
§ 5.14 p.m.
§ Baroness Faithfull
My Lords, I must start by making an apology to the noble Lord, Lord Allen of Abbeydale, and to my noble friend the Minister as I have a speaking engagement at seven o'clock and I may not be able to get back in time to hear the Minister's reply. If I cannot get back in time to hear that, I hope that I shall be forgiven.
I seek to speak on two matters only. The first concerns the Charities Act 1985. In his opening address my noble friend the Minister mentioned small charities. Reference is made to this Act in chapters four and six of the White Paper. Is it possible at this stage to be told to what extent small charities have voluntarily amalgamated under the terms of the Charities Act 1985? Can my noble friend tell me how many have not amalgamated? However, I realise this information may not be available.
Further, when is it proposed to bring forward the suggested amendments outlined in chapters four and six of the White Paper? As is known, I did not altogether agree with the recommendations of the committee chaired by my noble and learned friend Lord Brightman, which led to the passing of the Charities Act 1985. However, I appreciated the great wisdom of the noble and learned Lord in not making the amalgamation of small charities mandatory. He was quite right to consider that the country at that stage would not have accepted that. I have given notice of my next question to my noble friend the Minister. What exactly is the position with regard to the Charities Act 1985?
Coming from Oxford, as I do, perhaps it is inevitable that I should have made inquiries concerning the letter in The Times of 23rd November 1989 headed:Charity role in political arena".The letter concerned Oxfam. The charity role in the political arena is a sensitive and difficult area. If a 552 charity such as Oxfam should use its charitable status to promote a particular political party or a particular regime, or to be partisan in respect of a political party or regime, it would of course forfeit charitable status. However, having said that, Oxfam and many organisations like it are in real difficulties. If the objective of the project which they are promoting is to be carried out on behalf of beneficiaries who are in need —I believe Oxfam is promoting such projects —I believe my noble friend the Minister would agree that that does not constitute political partisan activity. It is fair to say that supporting a particular project may by implication be interpreted as being critical of a particular regime or party. I draw attention to the letter in The Times in which it was suggested that by helping the Palestinians Oxfam had inferred criticism of the Israelis. It could be said also that helping the starving Ethiopians could be construed as criticising by implication the Ethiopian Government who have not looked to the question of irrigation and who have not planned for their country's future. However, I suggest that the objectives of the Oxfam projects are relief to the starving, the poor and the ill. Therefore, I am sad that there has been criticism of the work which that organisation is doing.
I wish to take up a point made by the noble Lord, Lord Mishcon, and the noble Viscount, Lord Whitelaw, on the matter of the changing structures of our central and local government. These changing structures are affecting the giving of grants to charities, both at central and local level. A number of charities which are carrying out projects, and whose workers are all independent, are finding that the grants given to them by the Government have not been increased although their workload has increased. On a local level the reorganisation of the Inner London Education Authority devolved responsibility to local authorities. We all agreed with that but I believe that a number of voluntary organisations, in particular youth organisations, are suffering as the independent authorities are not giving the grant that ILEA gave. Therefore I plead, as did the noble Viscount, Lord Whitelaw, and the noble Lord, Lord Mishcon, for consistency in this matter and an appreciation of the problem.
Finally, I cannot forbear to join the noble Lord, Lord Lloyd of Kilgerran, in asking where the resources will come from.
§ Lord Lloyd of Kilgerran
My Lords, before the noble Baroness sits down, perhaps I may ask the leave of the House to apologise for not being in my place when the noble Earl, Lord Ferrers, replied to the question to which the noble Baroness has just referred. I put that question when I interrupted the noble Lord, Lord Allen of Abbeydale, as he presented his case. I did not think that this Government would be so swift to answer a fundamental question. I had anticipated that later in the evening I should be in my place to receive that answer. I am very grateful to the Minister. There is no need for me to be in my place late in the evening to hear the answer, since he has already given it. I shall read that answer in Hansard. It is an important question and I am very grateful to the Minister for having replied to it so quickly and so sincerely.
§ 5.21 p.m.
§ Lord Grimond
My Lords, I am sure that the House will admire the courtesy and indeed guile of my noble colleague who has just spoken.
It is always a great pleasure to follow the noble Baroness, particularly on a subject such as this. I very much hope that the Government will take note of what she has said. I thought that she made some extremely wise comments on the question of the dividing line between examination and propaganda. I was chairman of a minority rights group which examined the plight of minorities in different countries. We had to remain a charity and undertake not to lobby on its behalf. However, if one exposes what is happening to minorities one almost inevitably becomes involved in politics because the government in question does not like the exposure. Therefore I hope that the Government will be reasonably generous in their interpretation of what charities can do.
I am opposed to the enormous quantity of legislation which comes before us; and so, I believe, are most other Members of this House. However, when it comes to particular matters, as with expenditure, we very often find that pressure is brought upon the Government to introduce more legislation.
I began by thinking that as charities seem to get on fairly well, and there were no scandals such as there have been in other areas, perhaps we should leave well alone. But I was converted, largely by the noble Lord, Lord Allen of Abbeydale, when he argued that such an enormous business as charities have now become—and charity is very big business indeed—needs a fresh scrutiny. In any case, the Government are going to legislate. In general I approve of the White Paper, and I believe that this is a very sensible way to set about legislation.
I hope that the Government will lay particular stress upon the preparation of accounts. I believe that many people are interested in seeing in charities' accounts what proportion of their money goes to the real purpose of the charity and how much is spent on fund raising and administration.
I also hope that the Government will say a little more about the point raised by the noble Lord, Lord Allen of Abbeydale, concerning small charities. We are all aware that merely appearing on the register of charities is not a licence, but I believe that I am right in saying, as the noble Lord indicated must be the case, that small charities will not be expected to register, and although they will have to produce accounts a very simplified form of accounts may be adequate in their case.
I want now to go on to two rather wider subjects, one of which I am afraid may be considered rather controversial. First, I draw the Government's attention to the document Charities in Scotland: a Framework for Supervision, of which they are no doubt aware. In the discussion last year on the Woodfield Committee's recommendations it was pointed out that the committee had indicated that it would be unsafe to leave the law on charities in Scotland as it is. I was fairly sure that we should find that the Government intended to set up a charity 554 commission in Scotland, or some such body, knowing the liking in this country for quangos. I expected at least that a large amount of legislation would be produced for Scotland. However, I am delighted, though surprised, that that has not happened.
The Scottish Office has produced what I think is a very good document. It makes five recommendations. One concerns producing proper accounts, one affects the new powers of the Lord Advocate and the others concern the powers of the Inland Revenue. I should perhaps explain, for those noble Lords who are unfamiliar with Scotland, that in Scotland there is no charity commission and charities have to make their case to the Inland Revenue. That system appears to work reasonably well.
The Woodfield Committee was rather cryptic in its criticisms. It did not specify what was wrong in Scotland. I, for my part, find the document on Scotland a satisfactory document. Nevertheless, I should like to ask the Government why it is necessary to have a much larger machinery in England for managing charities than in Scotland. There are probably perfectly good reasons. Of course the subject is much bigger in England. It may be that in Scotland we follow the lead of the Charity Commission to a certain extent in that I believe that we now follow English law.
It would be interesting to know why there is that curious contrast between Scotland and England. Further, if it is enshrined in legislation will there not be a tendency for such charities as may be rather frightened of the Charity Commission to move to Scotland? There they would escape its investigations. I do not know whether the Government have considered that possibility, though it is a serious matter. On the face of it, it would seem that if one had any doubts about fulfilling all the demands of the Charity Commission one would move one's headquarters to Edinburgh.
The other matter about which I want to say a few words is the definition of a charity. All committees and the White Paper, and the debate today, have studiously avoided discussing the matter. I wish that that could continue, because it is extremely difficult to define a charity for the purposes of taxation. I sympathise very much with those who say that we should not go into the matter, but I believe that we are bound to do so if we are to produce a Bill on the question.
The fundamental question is whether or not those bodies are entitled not to pay taxes. If they do not pay taxes somebody else has to pay the taxes which they would have paid. The public at large has a right to know our position on the matter because the sums at stake are so large. Exactly how large they are may be a matter of some doubt, but, as has been said, the sums in question are of the order of £2 billion a year. Something of that order, or slightly less, is the amount of money that taxpayers and ratepayers in this country—many of whom are not at all rich—forgo for the sake of charities.
As I understand it, in Scottish law a charity used to be closely linked to the alleviation of poverty.
555 Now Scotland follows England in the definition of a charity, such as the Macnaghten definition, so far as it affects the matter of taxation. Most people think that the Scottish attitude is rather sensible. They believe that charity is connected with the alleviation of poverty. Indeed, the Oxford Dictionary connects the two closely.
We must realise that our terminology in this matter is becoming rather confused. Charity largely used to mean the giving of alms to the poor. It now covers all sorts of things; and rightly so. It is an enormous field. We talk of voluntary societies and bodies, but they are not voluntary in the sense that they raise all their own money or that their staff are volunteers. They may receive large sums from the Government and they quite properly employ a fairly highly salaried staff. The public schools are charities. Eton is a charity. Many lesser centres of education are charities. I believe that the Inns of Court are charities. The liveried companies are charities. We have heard of curious churches which are charities.
Not so long ago, I came across a very rich man who lives outside this country and who wished, for very unselfish motives, to give some of his money away. I asked him why he did not just give it away, to which he replied that he would like to set up a foundation which would bear his name. That is a perfectly proper ambition.
The question in all these cases is not whether it is a proper ambition, but whether we should indiscriminately relieve charities of taxation. That is the point at issue. I am in doubt about it. I am not sure, but I believe that there is at least a case for saying that those large, well-known foundations—I am not now talking of the Inns of Court or of Eton—should make a contribution to taxation. I find myself in two minds about the issue. I do not think that there is a cast-iron case for exempting them.
The reason that Eton, the Inns of Court and the liveried companies are charities is that they educate. But it cannot be said that the people whom they educate are necessarily the poor. Might it not be a condition of retaining charitable status that they either increase the number of poor whom they educate, which admittedly many of them try to do, or that the matter is looked at again and other arguments are adduced, as they can be? It can be argued that, by sending one's sons to a fee-paying school, one relieves the taxpayer of a certain amount of the burden that he would incur if they went to a state-aided school. I do not find that argument totally convincing. It is like saying that, because one works, one does not charge the state for unemployment benefit or national assistance and should therefore be suitably rewarded.
A stronger argument is that those schools are centres of excellence, but they are centres of excellence which largely benefit the better off. One may say that they are in the public interest, but a considerable number of people in this country believe that they are not in the public interest, that the division of education is not in the public interest, and that if we all went to the same kind of school we should be a more unified country.
556 In last year's debate, the noble Lord, Lord Wolfson, mentioned the enormous good that the large charitable foundations have done. He mentioned in particular the research work of Florey. It is perfectly true. There is everything to be said for encouraging that. If they paid some tax, would their benefit disappear? Would they go out of business? I do not know; but they are entering deep and large waters—deep in the sense that there are philosophical difficulties and large in the sense that the sums of money involved are very large.
The strongest case for keeping the present wide definition of charity is that in this country today there is a great deal to be said for having other centres of affluence and power than the government, so that the petitioner who wants something slightly unusual has a chance of obtaining it from places other than government departments. The strongest case for continuing the present administration of charities is that they fulfil that need. They provide other sources from which the ordinary citizen who may be refused government aid may obtain aid. However, charities are chiefly of benefit to the middle class. Far too much of our welfare state is of benefit to the middle class. Far too many subsidies on housing, transport and so on go primarily to the middle class. We should remember that the fundamental purpose of charities is to help those who are not well off.
My feeling at present is that we should perhaps totally exempt traditional charities which simply help to alleviate poverty and that a wider class might pay something towards taxation. The matter should be discussed. It would be a good thing if it were discussed in this House, as it would be discussed much more rationally here. The debate would be much freer of prejudice here than anywhere else.
One point that flows from this is the extreme desirability of low taxation. The whole of the problem arises because of the weight of taxation. I trust that the Government will press on with that.
As the noble Lord, Lord Renton, intends to speak in the debate, I should say that I hope that the Bill will be intelligible. When I ventured to say that the Scottish education Bill was not intelligible, the Minister very fairly agreed and said that he would arrange for an explanatory memorandum to be published with it. The Government should be able to legislate in a manner which they at least can understand. It should not be necessary for other people to draft explanations of it.
§ 5.37 p.m.
§ Lord Soper
My Lords, I welcome the White Paper, especially the invitation that it includes for contributions to its substance and meaning. I shall presume to offer a number of comments which are the product of almost a lifetime of involvement in these matters. Two of them, of a general nature, must be borne in mind for any effective contemplation of the role that they should play and the contribution that they can make.
First, it is not incorrect to say that in many respects enlightened policies of goodwill which are unilaterally pronounced and expedited in the 557 voluntary system can become the bell-wethers of enlightened public administration. Many of those adventures in charity which begin in small ways and in obscure corners develop, by the very process that by their works we begin to know them, into the substance of better general preparation and performance in the realm of public administration.
Secondly, most of the charities with which I have been involved have been stronger in heart at their beginning than perhaps they were in intellectual substance. However, I am encouraged by the great Pascal who said or wrote that the heart has its reasons of which reason knows nothing. That may be very dangerous, but, in as much as it was said by one of the most enlightened scientists of all ages, it is particularly important and, I believe, imperative in this regard. It is not necessary to be able to declare precisely all the evidence that belongs to a particular programme of charities in order to give it the opportunity of testing itself out and becoming far more articulate as the process is developed.
It is in that regard that I looked at the first of the propositions on which is found this particular inquiry into a framework for the future. Immediately I discovered that there is difficulty in describing in precise terms just what is a charitable purpose. I believe it is right to say that it denies the possibility of legal or statutory definition in many respects. Again, "public benefit" is an imprecise term, although most of us, I am sure, know what it means. In general terms I concur entirely with the commission and those who prepared the White Paper in their conclusion that it is not necessary precisely to define all the objectives of a charitable proposition in order that it may qualify for the process of being experimented with. I therefore heartily support the part of the document that denies the necessity for more precise statements. I take comfort in the much used phrase that provided something appears worthwhile in its substance to the heart as well as to the mind, it is worth trying.
I turn to the second of the observations that I should like to make which is in regard to religion. I believe that religion as a body of theology or a creed should not by itself be entitled to the opportunities and processes of a trust. Religious bodies should not automatically be regarded as having charitable functions. As a minister of the Christian faith I say with due care that I cannot find evidence to support the proposition that because a number of people collect together and announce something that they are prepared to defend as the truth, that necessarily indicates a compassionate attitude on their part and they are entitled to charitable status.
I am quite sure that the charitable status of the religion of which I am a member is justifiable. I shall not weary your Lordships with a catalogue of religions that are followed by others, from the Borneo headhunters downwards—or upwards, if you like. However, to give such groups a general baptism by hosepipe as if they were charitable institutions in themselves seems to me unwarrantable. Therefore, I oppose in particular the imprecision of what is said in the White Paper:The Government have considerable sympathies for these anxieties…. It has been suggested that the problem would be 558 solved if charitable status were removed from all trusts which are established to advance religion".That is quite simple. But "to advance religion" is altogether too vague a statement to justify the inclusion of all kinds of queer cults—I come across many of them, in the open air in particular—which would claim to be charitable just because they hold a number of beliefs which certain other people are prepared to endorse and offer their help.
I believe that charitable status can only be determined in the areas of performance and intention. What is required is a much more comprehensive understanding than as yet seems to be available of what we mean by charity. One thing that seems to me to be beyond all question, however, is that charitable status must be very largely antipathetic to a moral judgment on who practise it. Unless there is a provision within such legislation as is now anticipated for an essential attachment to the concerns of goodwill and compassion, I do not believe that we shall avoid difficulties and I do not believe that we shall produce the answer that is required.
I probably disagree with a number of my ecclesiastical friends in that regard. I believe that it is not sufficient to pronounce upon ultimate reality and, having done so, claim compassionate status. In this regard as in any other "by their fruits shall ye know them". In my judgment the only qualification that would justify giving a compassionate verdict is that it is manifest, although it may not be precisely clear, that the body works in the interests and the general progress of goodwill, kindliness and love. It is in that regard that I make my plea.
I realise that the difficulties are immense. I return to the point with which I began. There is one all important consideration. All charities must see themselves in the light of what ultimately will be the triumph of their success or the disaster of their failure. That is a corporate and social commitment. I do not believe that any government can ignore the fact that if charities progress, the government's responsibility will dwindle.
I believe that the public responsibility is absolute. But whatever may be the virtues, as I cordially regard them, of the way in which individuals practise in their own private affairs opportunities which are not offered to them within the public realm, I believe that there has to be much more; namely, that the real aim of a charity lies in making itself no longer desirable.
§ 5.46 p.m.
§ Lord Renton
My Lords, I am sure your Lordships will agree that the noble Lord, Lord Soper, has performed a valuable public service by saying what he has about so-called religious charities. There are some charities which call themselves religious but their purposes are so bizarre, and sometimes dangerous, that they should not be given charitable status. Bearing in mind the important position that the noble Lord holds in his own Church and the reputation that he has for being outspoken, I think we should be very glad that he said what he did. There is no need for me to embellish it.
559 I feel sure that the initiative of the noble Lord, Lord Allen of Abbeydale, is partly and largely the outcome of the splendid work that he has done in a wide area of charitable work, especially, I like to think, on behalf of Mencap, where he followed me as chairman and then president, which he now is. We should also be grateful both to my noble friend Lord Ferrers for the open-minded way in which he described the Government's possible intentions and, if I may say so, to the noble Lord, Lord Mishcon. It is unusual for me to find that when he makes a long speech, as he did, that he makes a speech with which I completely agree.
The noble Lord said some very valuable things, of which I shall remind him and the Government from time to time. Then of course we had that open confession which is good for the soul by my noble friend Lord Whitelaw. It is a fact that Home Secretaries have very limited powers under the present law. The Charity Commission has quite considerable powers but can never properly exercise them unless it is given the resources, which it has so far never been given.
I speak with a little feeling on this matter because I had the responsibility of preparing and piloting through another place the Charities Act 1960 which, added to by the small charities Act introduced by my noble friend Lady Faithfull, is still the basis of the present law.
It is rather interesting to reflect that the present law has mainly been evolved by the judges over centuries. The first framework was given to it in the Act of Queen Elizabeth I in 1601, and the Act of 1960 under Queen Elizabeth II contained eight pages of repeals of previous legislation. Although succinct by current standards—it runs to only 67 small pages compared with hundreds of pages of most present major statutes—the 1960 Act has stood the test of time reasonably well, as I am sure noble Lords agree. On page 33 of the White Paper the proposals for amending the legislation are very limited. When the Government introduce their Bill it needs to be fairly narrow in scope. I shall have a little more to say about how that might be done in a moment.
I know that a lot has been said about resources. Perhaps I may say a brief word. Since the 1960 Act was passed, and continuing every year, there has been an enormous increase in the number, size and diversity of charities. This has greatly increased the work of the Charity Commission. However, the main factor has been not merely the total lack of money and resources but, as has been mentioned and should be emphasised, the lack of enough qualified and experienced legal staff. The truth is that both branches of the legal profession find that their services are in such great demand that relatively young people in their early thirties, by becoming solicitors or barristers, can have a more prosperous and sometimes wider life. We therefore have to ensure that enough people with legal qualifications are attracted to the Charity Commission and that they remain there and obtain the necessary experience.
560 When the 1960 Act was discussed in another place we were pressed to insert a definition of charity. We resolutely refused to do so. I am thankful to see that Chapter 2 of the White Paper argues convincingly against doing so; so did the noble Lords, Lord Allen of Abbeydale and Lord Mishcon.
I wish to say a word on political activities by charities. We surely need to make a clear distinction between those bodies which have a political purpose as a main reason for their existence and those genuinely charitable bodies which find that they need to go public politically from time to time in order to pursue their truly charitable aims. I must confess that I have had responsibility for both those types of body. I venture to mention my contrasting experience.
As president of the National Council for Civil Defence, as it was called, which was mainly a pressure group to persuade the Government to spend more on protecting the people in case there should be war, we felt that we existed for the good of the people and that by pressing for better arrangements for dealing with emergencies we were pursuing a charitable aim. We therefore applied to the Charity Commission for registration. However, we were firmly told by the then Chief Charity Commissioner, "No, I cannot register you. If I register you I shall have to register the Campaign for Nuclear Disarmament, which has already applied and has been refused". We therefore accepted that and agreed that both his decisions were correct.
On the other hand, as chairman of Mencap I pressed first the Labour Government in 1978 and then the Conservative Government in 1980 to get as many mentally handicapped people out of those enormous long-stay institutions as possible and to provide financial help for us to get some of them living in small homes and hostels in the community. I am glad to say that in 1981 Mencap was given some modest financial help to get this started. If we had been forbidden by law to pursue that matter politically, and publicly politically, it would have inhibited our charitable purpose most severely. I therefore hope that we shall not have any rash, unwise provisions put before us trying to curtail that matter. But we have to be very careful that those who do not have a genuine charitable purpose but mainly a political one are not given the favour of charitable status. The White Paper has struck the right note on this at the end of Chapter 2.
Perhaps I may say a quick word on the cy-près doctrine. I agree that, as recommended in paragraph 19 of Chapter 6, it should be applied more flexibly. But I say that legislation is not necessary. The White Paper does not think it is necessary. It is simply a question of dropping a hint to the courts and to the Charity Commission, because it has a part to play in this also, and I think that we could achieve a better result.
On fund raising, practice and principles conflict. If it were made the law that the fund-raisers had to be paid before the charity received a penny, then some charities might fear that they may not receive the funds eventually. I do not know whether that is so, but I lean to the view that we should provide in 561 some way or another, or the Charity Commission could make it a condition, that the charity must first receive all the funds and then the fund-raisers should have their cut after that happens.
The White Paper is a valuable document. It is a White Paper with a blue cover. It could provide a blueprint for the future. Not much legislation is needed. We should merely marginally increase the powers of the Charity Commission, as suggested by the Woodfield Committee, and let the courts continue to decide cases in what my noble friend Lord Ferrers called an ever-changing situation.
I was very glad to hear the noble Lord, Lord Mishcon, say, "Do not let us be too legalistic". I was also very grateful to the noble Lord, Lord Grimond, for saying that if there is to be legislation let it be intelligible. It would be a serious mistake for us to legislate in detail to cover a mass of hypothetical cases which are in any event part of an ever-evolving practice. Several broad statements of principle are acceptable so long as they do not descend to detail. But I do not think that we need even that. Let us stick to the minimum of legislation and the maximum of provision of resources.
§ Lord Molloy
My Lords, before the noble Lord sits down perhaps I may ask him this question following his excellent and informative speech. He mentioned that lawyers and solicitors should be more active in assisting charities. Many professional people who are involved in charity work give their services for nothing. Would such barristers and lawyers give their services for nothing?
§ Lord Renton
My Lords, I am sorry but the noble Lord misheard me. I said that we should try to persuade as many qualified lawyers as possible to work in the Charity Commission. A great many work with charities, either voluntarily or otherwise. If one may dare to be egoistic in your Lordships' House perhaps I may say this. I returned to the Bar in 1962, since when I have become involved in unpaid work for various charitable organisations. I have been fully involved, as have many other lawyers, both solicitors and barristers.
§ Lord Mishcon
My Lords, so that it is apparent that such activity does not exist on only one side of the House, on many occasions I have also had the pleasure of acting as honorary solicitor to charities and carrying out the same good work as the noble Lord, Lord Renton.
§ 6 p.m.
§ Lord Brightman
My Lords, I welcome the opportunity to say a few words about, and stress the urgent need for, reform in the field of charity. After reminding us that no licence is required from the Charity Commissioners before a charity can appeal for funds, the report of Sir Philip Woodfield referred to:the continuing high public concern about malpractice in charitable fund raising".I should like to give your Lordships a short example of malpractice which came within my personal knowledge and demonstrate the moral to 562 be drawn from the story. Mr. Brown—that is not his real name and I shall say nothing which will identify him—was a failed businessman living on public assistance. He had been associated with a building society which was wound up and a finance company which collapsed. He had been through the bankruptcy court.
After those misfortunes he decided to turn his attention to raising money for charity. He registered a charity for the relief of children in the third world. He bought over 1,000 collecting boxes and distributed them to public houses, hotels, restaurants and factories. They were not a success. The money collected was small so he stopped distributing the boxes. However, he did not trouble to retrieve all the boxes which he had put out as he should have done. Two hundred and thirty-four boxes were left lying around because Mr. Brown said that it was too expensive to collect them. Therefore, those boxes remained on site as a continuing invitation to the public to donate money to a charity which the money would never reach.
After the setback Mr. Brown decided to go in for more active collecting. He rented a small office. He engaged so-called "area organisers" whose job it was to recruit collectors and to receive from them in the contents of their collecting boxes. But he did not take up the references of area organisers before engaging them because, as he said, they were so difficult to find. It later transpired that one of his area organisers had already been convicted of serious criminal offences in connection with charities. I should mention that Mr. Brown obtained without difficulty from the Metropolitan Police a licence under the House to House Collections Act 1939 enabling him to promote collections in London.
Those responsible for collecting money for Mr. Brown's charity received a commission varying from 20 per cent. to 50 per cent. of the donations received. Mr. Brown's theory was that it was better to pay the high commission and collect some money in than to collect no money at all.
The so-called "charity" operated for a period of three years until the Charity Commissioners got wind of what was happening, and with much difficulty managed to put a stop to Mr. Brown's activities. During the three years of the charity's active life, a sum exceeding £10,000 was collected from unsuspecting members of the public. The public never knew that not one single penny was spent on any charitable purpose during the three years. The cost of collecting was so high that out of each pound donated only 11 pennies remained after Mr. Brown had deducted commission and other expenses.
Many people consider it distasteful to resist the rattle of the collecting box or to turn a deaf ear to an appeal. No one likes to cast himself in the image of a Scrooge. But if the true facts had been known to the public, as they became known to the Charity Commissioners and to me, I am certain that not one single penny would ever have found its way into any of Mr. Brown's collecting boxes.
That simple story, which for all I know is not unique, demonstrates how necessary it is that 563 Charity Commissioners should be given the powers, the staff and the finance which they need in order properly to regulate and monitor the activities of charities. The activities of fund raising charities should be strictly controlled. There should be restrictions on the amount of commission and expenses that can be claimed against charitable donations. There should be some qualification required of people who are permitted to organise and run charitable appeals and collect money from the public.
I should like to mention only one other matter, if noble Lords can bear with me for a moment longer. The subject has already been touched upon by the noble Baroness, Lady Faithfull. Section 3 of the Charities Act 1985 enables the trustees of a small charity to resolve to transfer their whole property to the trustees of another charity with comparable charitable purposes as an accretion to the funds of the transferred charity. Such an amalgamation is effected by a simple resolution of the transferor trustees under the supervision of the Charity Commissioners. The purpose is to eliminate the expense of operating a small charity and so avoid the unnecessary waste of money and effort. The section is confined to charities with a gross income of £200 a year or less. But—and this is the important point—under Section 5 of the Act the Secretary of State has power to increase the limit by negative instrument.
That power to amalgamate charities was an innovation. It was well received. First, it was applauded by the noble Baroness, Lady Trumpington, speaking on behalf of the Government on the Second Reading of the 1985 Bill. It was a Private Member's Bill which started in this House. She said:We believe that this power for trustees of small registered charities to transfer their property to another will appeal to trustees and others who want to see sensible use made of small, perhaps dwindling, amounts of capital and who believe that the money cannot be put to good use in isolation… We think that its simplicity should commend the procedure to trustees".—[Official Report, 17/12/84; col. 492.]Secondly, the power was blessed by Sir Philip Woodfield in paragraph 93 of his report. He recommended that the limitation to charities with an income not exceeding £200 per year should be altered to £1,000 per year. Thirdly, the extension to charities with income of £1,000 per year was blessed by paragraph 6 of the White Paper without imposing any additional restrictions or qualifications on the use of the section.
Fourthly, the viability of Section 3 as a welcome means of simplifying charity administration has been amply proved by the fact that 169 amalgamations were processed by the Charity Commissioners last year.
I should like to ask the noble Earl, Lord Ferrers, whether it would not be possible for the limit of £200 to be raised now to £1,000 by the simple expedient of an almost one-word statutory instrument without waiting for a new charities Act in one or two years' time. I ask: would not the public interest best be served by a statutory instrument 564 now particularly having regard to the difficulty of predicting, as the noble Earl said, when primary legistlation will take place?
§ 6.12 p.m.
§ Baroness Macleod of Borve
My Lords, it is a great privilege to follow the noble and learned Lord, Lord Brightman, and I was very interested in his story of Mr. Brown, as I am sure the Charity Commissioners will be. If we can relate that story throughout the charity world, then I feel that that will save a lot of trouble. That was not a new story to me although it may be to others.
We are privileged this evening to have my noble friend Lord Whitelaw with us, sitting as he does behind a desk at the Home Office in order to take charge of a part of charity work. He will now know charities from both sides of the desk, and I do not believe that charities could possibly be put in better hands. I am also very much indebted to the noble Lord, Lord Allen of Abbeydale, for bringing forward the discussion this evening on the White Paper. That is a very important document which raises many of the problems which some of us will have to overcome.
I should like to make a few remarks from my own experience of charity work. My noble friend Lord Ferrers referred to trustees. I am privileged to be a trustee of several charities and on behalf of them, I welcome the further responsibilities which this White Paper will give us. I believe that we all work hard with diligence and try to do the best we can, sometimes with very small amounts of money.
Speaking of money, I hope that in future the accounts of all charities will be examined by accountants. I understand from the Minister that we are to pay a sufficient amount of money to the Charity Commissioners so that there will be quality, as one noble Lord said, as well as quantity.
I should like to ask in particular, as was also mentioned by another noble Lord, whether the accounts of appeals on television are submitted to the Charity Commissioners. I believe that the general public would rather like to know where the very large amounts of money are going which are raised very cleverly by those appeals.
It has been brought to my attention that a number of charities hoard—and "hoard" is perhaps not the word one should use—or do not distribute money freely given to them. In many cases, those charities are sitting on large amounts of money which have been given to them to be used. I hope that the Charity Commissioners will look into that matter because I know that that does occur. Also, I hope that when the accountants go through the accounts, they will look at the comparative percentages of the overheads because some charities, as we all know, have a large number of people working for them who are perhaps taking up too much of the incoming revenue of the charity.
Also, as the noble Lord, Lord Allen, mentioned, too many charities are aiding the same objective. Again, I hope that the Charity Commissioners will look at that matter through the cross-referencing which will be available to them in the future.
565 I understand from this document that registration of charities will be computerised. As we all know, that can cause problems. Every year I work hard for a charity which appeals at Christmas time on behalf of the single homeless. Unfortunately, our computer has failed which means that we were unable to start writing our appeal letters in October. As a result, we have been inundated with letters. Because of the failure of the computer, we now have only one weekend in which to write the letters—and when I say "we", that means "me".
I hope that that spring cleaning of the register of charities will go ahead. Some of us may have seen a television programme some two or three years ago. In that, I was absolutely horrified by the conditions in which the Charity Commissioners had to work. They were almost Dickensian. I suppose that even a broken down computer would be better than that.
I wholeheartedly agreed with my noble friend Lord Renton when he spoke about political pressure groups. That is a difficult subject. It is sometimes difficult to decide whether a charity is helping government to make a decision one way or the other, or whether it is putting too much pressure on them.
Another point which I should like to raise is that the money raised from the public on behalf of a certain charity for a specific cause should be used in that way. It should not be diverted into other channels. To my certain knowledge that happens, and I hope that the Charity Commissioners will see that the money is used for the purpose for which the donations were given.
This has been a very interesting debate with different points covered so well by many speakers. I want to pay my tribute tonight to all those who work for charities for nothing. They are volunteers in the truest sense of the word. They collect money; they work for people, but as far as the fund raising is concerned they do it freely because they believe in the charity for which they work. There are thousands and thousands of them throughout this country and our country could not do without them. I therefore pay my tribute to them.
§ 6.20 p.m.
§ Lord Houghton of Sowerby
My Lords, the noble Viscount, Lord Whitelaw, has exposed himself to some attention. Without looking at him I will say that all Home Secretaries share the blame for allowing the Charity Commission to fall into the decrepit condition that it has been in recently. It has been utterly unable to discharge the responsibilities, meagre as they are, under the existing law. It has no hope of coping with problems which are now arising fast and somewhat furiously in the charitable world.
The noble and learned Lord, Lord Brightman, gave a fascinating account of the failure of the charity law and the supervision of those concerned to detect fraudulent activity. I have a better example than his. In my former constitutency a few weeks ago—I repeat, a few weeks ago—a man was sent to prison for having defrauded people locally by posing as a charity and getting notable patrons around him to bless the appeal that he was making. He was conducting his operations from a lonely farmhouse 566 on the Yorkshire moors; nobody knew what he was up to except those in the immediate family. Before anybody found out anything about it he had cleared half a million pounds. What are we to do about people like that? It is no good being cosy about the regime that we must impose on those who are given a licence to make an appeal to the public and a licence to receive all the concessions of taxation and local government assistance on account of being charities.
The amount of revenue being forgone in concessions is enormous. Mortgage interest relief amounts to £4.5 billion; pension contribution concessions and pension funds, another 4.5 billion; charities now amount to over £2 billion. Over £10 billion of revenue is being forgone in three fields of social activity. We must watch this because it will all come back on the revenue and that means that it falls back on the taxpayer.
By common consent—or almost common consent—we have left out of our review of charities at this time the definition of what is a charity. I am glad we have done that, but I think we will have to come closer to it before this Bill is passed by the House in the next Session. I will tell your Lordships why. The boundaries between state provision and other provision are being moved into the field of charitable activity. If your Lordships do not take heed of that, it can be found in the farewell message of the retiring chairman of the National Council for Voluntary Organisations—the Reverend Alan Morgan, who has just been appointed Suffragan Bishop of Sherwood and who had to resign from the chairmanship of the NCVO. He says:In the period I have been Chairman of NCVO, the growth of voluntary organisations has reflected the shifting boundaries between the state, the private sector and ordinary citizens".He states that the voluntary sector has now to respond to the new demands that are laid upon it as the Government adopt a more limited role in relation to the economy and society.
What is happening is that the Government are gradually moving the responsibility for the test of needs from the state and public provision to the charities. The charitable organisations at present are becoming indispensable adjuncts to state provision for the maintenance of basic services. It is not money they distribute so much; it is services. They are the most difficult to provide but they are being left more and more to the voluntary sector.
That has a bearing upon the role of charities in the future. It will not be as a pathfinder for new areas of need and new provision that might be made by the state but as an indispensable partner to the state itself. That will mean a very big difference to our approach to the whole question of charity law.
We owe this White Paper to the noble Lord, Lord Allen of Abbeydale. But for his persistence we should never have had it because the indolence of the Home Office about the condition of the Charity Commissioners was in this field of the review of charity law. It is quite an education to read back and see the first responses from the Government Benches about the approach to them for a review of this kind. They did not want to know, but it was the pressure of the charities themselves that added to the 567 insistence of the noble Lord, Lord Allen of Abbeydale. We are grateful to him. He should go down in the history of charity law as one of the great benefactors of the age.
Since our last debate in February several things have happened which have a bearing on this debate. First, we are now fairly well up to date with the new flood of charitable appeals. I have brought mine with me. I do not know what other noble Lords experience in regard to the junk mail that is put through the letter boxes at this time of year. Do the noble Lords open it themselves? If they do they will make a discovery about the inefficiency and the waste of money that is now circulating over a wide area. More and more expenses are being incurred and, in some respects, more misleading propaganda is being sent out to seek further assistance from the public.
I have here mail from 16 charities, but six of them are duplicated. It is extraordinary that some are addressed using one's title. Others are addressed using one's former role of Mr. They probably send a similar envelope to your wife addressing her as "Mrs." and then another one arrives addressed to "Lady". If you have another address besides the one in London then you get still more of this mail. I have five here from one rather small charity.
There is another aspect. A careful look at the mail that arrives will show a number. Watch that number; see whether it occurs on more than one of the appeals received. My number is 15533. That occurs on one appeal after another. It means I am a marked man in the charitable world. I am identified. I do not know whether this number goes the rounds and whether I am classified as rich, gullible or as having given money to charities before. Am I a likely lad, or what?
I believe that this kind of approach causes people of good will towards charities a great deal of irritation at this time of year. A charity states on an envelope with large letters which one cannot help but read:Inside how you can help a crippled child to walk within 3 months".If you do not open that you have a heart of stone, so you open the envelope; but the contents are not what you think they are. They are misleading, but it is not a criminal misstatement. I do not like that kind of method. I shall leave the charities to do something about their own circularisation arrangements because change is very badly and urgently needed.
The next point I wish to raise is the Government's decision to allow commercial advertising for charitable appeals. There is a good deal of concern about that matter. I sent a long letter to the Home Secretary in which I asked a great number of questions about this form of advertising. A reply came from the present Home Secretary to the effect that it will be the IBA which will be largely responsible for overlooking standards and all the rest of it. That is a development which we shall have to watch carefully. A monitoring committee is to be set up to look at the situation. All kinds of problems will arise in that regard.
568 The next issue is novelties in the field of institutional charitable fund raising. A local authority which owns the local bus service put a notice in a bus on Friday 17th November to say that all the fares collected on the bus after 6.30 p.m. that night would be given to the Children in Need fund. What authority has a public body to announce to its passengers that all that they pay in fares after a certain time is going to charity? Think of the implications of a passenger saying, "I am not playing this game and I am not paying you my fare if it is going to charity. I shall give you my name and address and deal with the local authority. If you attempt to turn me off this bus then all the rest of the passengers will have to stay on until the conflict is over".
There is also the policy of the Post Office. I wonder whether noble Lords have noticed what it is doing. It has introduced Christmas stamps. The 15p stamp is free of the charity levy but all other denominations of Christmas stamps have a levy of 1p. You cannot buy a Christmas stamp above the value of 15p without paying a charity penny. But the Post Office says that you are quite free to buy stamps of other denominations from the Post Office; namely, the ordinary stamps which are on sale.
My mail goes out with ordinary stamps on all the envelopes—airmail and the rest but not Christmas letters and those requiring a stamp for more than 15p. The Post Office will say, "This fellow is a mean chap. He is not sticking Christmas stamps on his letters. What the hell is wrong with him?" This policy is discriminatory. What is more, the Post Office does not know what to do with the money. It is expecting to raise £1 million from the scheme and so it commissions the Charities Aid Foundation to decide how to give the money away.
I want to know by what statutory authority the Post Office operates this exercise. Who says that it should become newcomers in the field of charity fund raising? I have not as yet got an answer to that from the Post Office, but I have been told by the chairman of the Post Office Users' National Council that it was informed shortly before the scheme started what was being done, but it was not consulted. That is outrageous. Fancy not consulting that organisation when the Post Office intends to introduce a charity tax into the postal system. I will leave that matter there.
In the field of institutional fund raising we shall have to take more notice than we have done of what is happening. When we reach the broadcasting Bill, that may be the time to raise the question of the role of the television authorities concerning fund raising. This morning I read in the Independent newspaper that the television authority chiefs have deferred a decision as to whether they are to launch another appeal for the relief of starvation in Ethiopia. We know that we are on the threshold of another tragedy which will probably be even worse than that of 1984.
I wish to know whether the television authorities are in control of the nation's voluntary effort on a world scale of this kind. Is that part of their statutory obligations, and is it in order for them to do so? Are the Government not consulted? What are they going 569 to do about this threatened tragedy of which we shall hear a good deal on television?
I come now to the question of religion and the qualification for charitable status. I hope that we are not going to have religion dragged into our debates at the present time. Leave the Moonies alone; they do not matter. If we are to consider the Moonies and give opportunities to the Charity Commission to examine the credentials of dubious charities with a view to withdrawing their registration, we have to be careful not to regard that as relating only to religious charities. I believe the examination has to be spread overall. There should also be an independent tribunal if any organisation is to be struck off the register.
At last we are beginning to regard charitable effort and the voluntary societies as having great social and economic importance. In my home when I was a boy, the word "charity" was the most hated word in the dictionary. To those of my generation charity was humiliation, despair and patronage from those who were better off. In my home all our charitable work was conducted between neighbours. We did not want patronising ladies with fancy hats coming to see what was wrong in the home; what they could do for us, and look down upon us; to consider that the house was not tidy or the kids were not properly washed, and that kind of thing. We do not have that feeling now. We have raised the status of charities and realise that they have a different role.
In conclusion, let us guard against charity becoming an industry. There is now considerable professional interest in charitable work. We have an association of charitable fund raisers whose members I am sure confer together to decide what is the most promising line of approach for the circulars that we receive. We have to watch this situation very carefully. In my opinion no regime proposed in this White Paper is too harsh to apply to charities regarding the handling of money and the conduct of their affairs.
§ 6.38 p.m.
§ Lord Wolfson
My Lords, it is a privilege to follow such a redoubtable speaker as the noble Lord, Lord Houghton. Having listened to his robust views as one engaged in the work of charitable trusts and having spoken in the debate last year, I shall try to be concise today. Once again we are indebted to the noble Lord, Lord Allen of Abbeydale, for introducing this discussion. I am very pleased to note that the noble Lord, Lord Nathan, is to speak next. His father was largely responsible for the 1960 Act. In 1955 he drew up the deed for my family charitable trust, for which I am always grateful.
Part One of the White Paper deals with policy and the law in the voluntary sector. After paying tribute to its work, it proposes a well-balanced programme to encourage individual initiatives coupled with strengthened regulatory requirements to protect both beneficiaries and taxpayers. This policy will give donors the confidence that is essential to the healthy development of their increasing participation in charitable activity. In this regard, the point made by the noble Lord, Lord 570 Mishcon, on reinvestment was a good one and worth bearing in mind.
Reference is made in the report to the growing partnership between the Government and private sources in making matching grants, which, for example, has proved so successful in the case of the children's hospital at Great Ormond Street. This partnership is being further developed, particularly in funding for the arts, giving an important multiplier effect. That is very welcome indeed, as is the requirement for the Charity Commissioners to focus more sharply on inefficiency and abuse.
I should like to refer to some of the Woodfield recommendations, which are summarised on pages 61 to 63 of the report, and to mention some other relevant issues. First, I turn to recommendations 3, 4, 5 and 11. These relate respectively to the apppointment of two additional part-time commissioners, the setting up of a top management board, information technology strategy and training for staff engaged in examining annual accounts. Desirable and overdue as some of these objectives are, there is no indication in the White Paper of the timetable involved or of the internal cost of implementing them.
An alternative way forward might be to invite leading business organisations and accountancy firms to offer experience and, because it is for charitable purposes, free advice on these matters. Such commercial and professional advice would provide quicker access to proven management techniques and cost-effective methods for the commission, which would accelerate the implementation of the proposals. I hope the Government will give some thought to this possibility.
I am not clear as to the role of the two additional part-time commissioners because it is not stated. This omission should be corrected, as numbers per se are not necessarily to be equated with improved performance. Again, the noble Lord, Lord Mishcon, made the relevant point about market rates of pay to attract and retain talented people.
Secondly, I turn to the additional powers recommended for the commissioners in paragraphs 19 and 22. Those are certainly needed. I hope that the legislation will define in specific terms the criteria for their use so that the rules are understood and respected by all concerned. Prevention is better than cure.
Thirdly, I too am not really happy about the recommendation that the commissioners should be enabled to introduce charges for new registrations. Charities already pay for their professional costs, and although the proposal is not unreasonable, this could well be the thin end of the wedge. It seems a pity to charge charities approximately £750,000 per annum for registration services, a petty sum to the Exchequer paid with money that otherwise would have gone to a variety of good causes, but for them a not insignificant amount. I do not believe that the Government intend to penalise charities in this way, and consequently I hope they will review the matter in a sympathetic manner.
571 In this context I am uncertain as to who will be responsible for the overhead expenses, as distinct from the supervisory costs of the Charity Commission itself, which occupies premises in the West End, although I am pleased to learn that more of its activities are being relocated to Taunton. It is a question of quis custodiet. If in future charities are required to defray part of the commission's overhead costs, they need to have knowledge of these matters. It would be helpful if in the course of time the commissioners were to provide similar financial and other relevant information as proposed for the charities themselves, particularly to publish annual accounts with a narrative report, to summarise by sector the work of the charities, highlighting financial account features and cost performance comparisons, and to report on the progress of the commission's computer information programme.
I should still like the commissioners to monitor more closely the parameters for the administration costs of charitable trusts and fund-raising bodies, to which the noble and learned Lord, Lord Brightman, has referred, and also the purchase of supplies and services in the best market. Any saving in these areas would result in additional donor funds being available for the charitable purposes intended. Guidelines are needed for overhead expenses which encourage prudence and provide suitable penalties for indivudual extravagance.
Similarly, effective joint buying methods on commercial lines should be required for the purchase of supplies and services, with at least three quotations being obtained to ensure value. I hope that the Government will give further thought to these matters and perhaps also consider a modern adaptation of the word "charity" itself, a time honoured but rather old fashioned and patronising phrase associated with a bygone era, as the noble Lord, Lord Houghton, pointed out.
The Sunday Times referred to the White Paper on community care, which acknowledges the major voluntary role of relatives, neighbours and friends, as a remarkable example of individual caring to help others less fortunate. In addition to the substantial personal contribution, the private sector now provides valuable and growing support totalling £13 billion per annum, of which 20 per cent. is tax relief but 80 per cent. is extra funds. This money is provided for vital areas of health and welfare, education, the arts and humanities. I prefer to think of many aspects of these activities as a catalyst; an investment in people in innovation, in research, in better facilities and improved caring arrangements.
A good heart allied to a good head and integrity of purpose provide an essential framework for effective charitable work as defined in law. The White Paper recognises these factors. The Woodfield Committee is to be congratulated on its well researched proposals. The Government have moved with commendable speed to produce the White Paper. The impending legislation will provide necessary improvements to the law and will enhance the performance of charities in the voluntary sector.
§ 6.46 p.m.
§ Lord Nathan
My Lords, the noble Lord, Lord Wolfson, made some very kind remarks about my father and his work not only in relation to his great family foundation—one of the great foundations in the country—but also in relation to his report of 1951 which led to the 1960 legislation of which the noble Lord, Lord Renton, spoke earlier. Since those days, the number, size and diversity of charities has grown enormously, and so have social changes affecting trustees. It is to that topic that I should like to speak this evening.
The legislation foreshadowed in the White Paper will make an essential contribution to the proper supervision of charities and thus contribute to making them accountable. The public increasingly and rightly require to know how their money is spent and to know that it is applied in the best way to achieve the stated objectives for which they gave it. But legislation needs to be supplemented by improvements among charities in their capacity to regulate their own affairs in order to become more efficient and effective.
Trustees have a central role in the management and administration of charities. The White Paper stresses the need for charity trustees to be more aware of their duties and responsibilities. The noble Earl the Minister referred earlier to the special responsibility of trustees. It is not adequate to consider the rare cases of inefficiency and abuse which can be dealt with by the Charity Commission when required. A wider view must be taken, with those involved in the voluntary sector in the lead, as to the source of trustees in the coming years, the extent of their duties and therefore their commitment and the talents and aptitudes required; and as to the provision of advice, information and training which may be required.
Charities are infinitely various in size and purpose. The duties of trustees—and those who can best fill the role—are equally various. In larger charities providing services, there may be a substantial staff, the most senior of whom may equate, in a commercial context, to senior executives. In that way trustees may fill a role somewhat akin to a supervisory board. They must maintain the mission and purpose of the charity and assess its performance. An assessment of performance is not to be measured solely in the case of charities by provision of the cheapest service; it can also be done by involving recipients as active participants rather than their remaining passive and dependent. The objective may be to create spin-offs of benefit to community activities. Therefore there needs to be a qualitative as well as a quantitive assessment of performance.
The same principles apply to small charities, possibly local in operation, where the trustees carry out the functions themselves without any assistance from persons who are employed. In all cases the qualifications, talents and aptitudes of the trustees are of first importance. This is the context in which I believe it is important that much attention be given to the provision of informal courses and discussion 573 groups, as well as more formal training, where required, for trustees. The money required would be well spent on this aspect.
A great encouragement in this respect would be the allocation of some funding for the purpose by the great foundations. The National Council for Voluntary Organisations to which the noble Lord, Lord Houghton, referred may be one of the bodies to provide such a service. I should make it clear that I have no authority to suggest that it either should or would do so; I mention the organisation merely by way of example.
The source of trustees requires consideration in view of increased demands on senior management in business. Not so long ago it was quite customary for the chairman or senior directors of a great public company to allocate part of their time to being trustees and to being responsible for the great charities in the country. Yet that situation is now scarcely possible since the pressures on senior management are so very great. Therefore that source is no longer so readily available.
It is true that the existence of more leisure time seems to result in much volunteering, especially among young people in the environmental contexts. It is for consideration whether this will spill over into willingness to be a trustee of all the wide range of charities which require them. It is very different for a young person to volunteer to clean out a canal or to undertake some other physical work in a voluntary capacity for charity than it is for him to take on the responsibility of being a trustee for a local or indeed a national charity, which requires rather special talents and experience.
Women are increasingly drawn into employment and therefore they are not readily available as trustees, although their experience and talents may be especially appropriate to particular kinds of charity where they have made such a contribution in the past. It would be wrong and most unfortunate if the willing people in what has been described to me as the age group of 60 to 75 years of age— that is, the retired or shortly to be retired population — constituted the vast majority of trustees. The duty of trustees is to direct the trusts into new and exciting fields. Moreover, this is not a field which should be monopolised by those people in retirement, although I should emphasise the great contribution that so many of these people provide.
The idea of bringing to the public eye the need for volunteers as trustees has not hitherto been much canvassed. I believe that it has now become necessary to do so as the burdens increase. As we know, there are burdens on the vast number of charitable trusts from increased registration. There are also the burdens being put upon them —rightly, in my view —under the proposals contained in the White Paper.
I understand that experiments are being made with a register of people who would be willing to be trustees and that the compilation of this register is presently being put in hand. That may indeed be one way forward in the matter.
This debate presents an opportunity for discussion beyond proposing or questioning proposals for 574 action by government. Recruitment, assessment and training of trustees whose importance is emphasised by the White Paper, and, as I said, by the Minister, should be the prime responsibility of the voluntary sector, assisted I suggest to the extent to be considered by the Charity Commission. However, the Government should not intervene in this field.
There is one other matter to which I should like to draw your Lordships' attention. However, I do not wish to spend too much time in so doing. This is the concern which I have with regard to fund-raising. It is not a concern which has been raised thus far in the debate. The Charity Commission has certain powers in relation to the fund-raising carried out by charities. However, there are now many organisations which are very well-known and which are excellently, run. They collect very large sums of money, but they are not charities. If one of those organisations which is not a charity mishandled funds for which it had appealed and which it had received, it would have the most devastating effect upon the collection of money for charitable purposes. It seems to me therefore that it is a matter for consideration whether some control ought to be placed upon fund-raising in respect of non-charitable bodies.
I have heard mention of the name of one such body of the highest standing. It is generally regarded as one of the leading charities in the country. I refer to Amnesty International. It is not a charity. Indeed, the courts so found not so very long ago. It would be disastrous if an organisation of such high reputation which is not a charity mishandled funds which had been susbcribed to it. As I said, it would have a devasting effect upon the whole field of charitable collection. Therefore, in my view, it is a matter for consideration as to whether control over fund-raising should be extended beyond the charitable field.
§ 6.56 p.m.
§ Baroness Elliot of Harwood
My Lords, I have listened with great interest to the whole debate. It has been quite fascinating. It also demonstrates the fact that we are all present in the House tonight enjoying the debate without being divided by any political division whatever. I think that we have all been engaged in charitable work and we have all had experience of charitable organisations. Indeed, we all speak with authority based upon our own experiences.
I am speaking today on the proposals contained in the White Paper because I have had many years experience in charitable organisations. I agree with the main proposals which are set out in the report from the Home Office. My agreement is based on experience. The trust with which I have had the longest association is the Carnegie UK Trust. I have been 40 years on the executive and now, although no longer on the executive, I remain a trustee. With my experience I can support the many proposals contained in the report.
The Carnegie UK Trust always publishes an annual report and accounts and always sends these to the Charity Commission and in Scotland to the Inland Revenue. The trust's policy has always been 575 based on a five-year period and that policy has always been clearly outlined for the public to see and understand.
The same principles applied to another trust with which I was associated for 16 years. It started as the King George V Jubilee Trust and over the years has undergone many royal changes. It has now been amalgamated with the many trusts of the Prince of Wales and funds many excellent organisations. As the result of my experiences I entirely support paragraph 1.7 of the report describing partnership with the Government.
Much of the social work started many years ago in places such as youth clubs, community centres, village halls, amateur drama and music groups and clubs for handicapped and non-handicapped people run by an organisation known as PHAB and also the work done by the Mental Health Association and the Society for Autistic Children, originated from the efforts of a few enthusiastic people who started the work on an entirely voluntary basis. They were so successful that the organisations have grown and are now spread all over the world.
In 1938 or 1939 the Department of Education set up a committee to inquire into youth clubs and youth work. I was a member of that committee, having been chairman of youth club organisations. The result some years later was co-operation between education committees and youth organisations. Today all local authorities have youth committees which are generally linked to the education committees upon which voluntary organisations are represented.
My noble friend Lord Whitelaw spoke about the co-operation between voluntary and statutory organisations, which has been an enormous success. In the report the Government say that they will continue that co-operation and give financial assistance to voluntary organisations which will be in addition to the fund-raising efforts of the voluntary organisations which will and must continue.
There is another valuable aspect of the matter. Sometimes new ideas are put foward. It is not known whether they will be successful but they might break new ground. Voluntary funds can help with such experiments. If they succeed, all good and well. If they fail, and that is also an answer, no public money will have been involved and no harm will have been done to the public. Such experiments are only possible because they can be funded by voluntary effort.
A difficult problem arises sometimes about whether the help given has a political interpretation. I agree with what my noble friend Lord Renton said. I am against political influence in voluntary organisations. I support the Government's view on that matter. All the societies with which I have worked and have helped have been non-political. That is a policy which should be maintained. I also agree that the Charity Commission should have powers to deal with abuses, although there has never been any abuse in any of the charitable organisations with which I have been associated. I was interested in the terrible story told by the noble and learned 576 Lord, Lord Brightman. Luckily I have never come across such abuses.
Small charities and charitable organisations occasionally come to an end and funds are left intact and unused. I agree with the White Paper that the commissioners should have powers to transfer that money to an approved operating charity.
The work done by the Charity Commission is vital to the organisations, but I hope that discretion will be used, as indicated, in respect of charges to be made. It would be a severe drawback if the Charity Commission had to charge a large sum of money which would have to come out of charitable money which we want to go directly to the cause for which it is raised.
I am told by trustees whom I know that they are being inundated with requests for grants. I therefore believe that the conditions laid down in the White Paper will be of help to them and fair to both parties. There are many other proposals in the White Paper. I have spoken of my own experiences. I approve of the White Paper. I shall support the Government in any legislation brought forward along those lines. I congratulate the Government on their policy.
§ 7.4 p.m.
§ Lord Rodney
My Lords, I should like to join other noble Lords in welcoming the White Paper and I thank the noble Lord, Lord Allen of Abbeydale, for giving us the opportunity to debate the subject. When one comes so late in the batting order, the chances are that a great deal of what one wanted to say has already been said. To a certain extent, that is the case this evening. On the other hand, I was delighted to hear a number of noble Lords mention cults. The right reverend Prelate the Bishop of Chester devoted almost half his speech to them. I look forward to reading the General Synod's report which he mentioned. If he will excuse me for saying so, it sounds as though at long last the Church has come down strongly against those new so-called religions.
My impression is that, although examinations of applications for registration have been thorough, if such applications contained references to religious connections, that was to a great extent accepted at face value and registration was granted without too much investigation. However, as many noble Lords have said, the system has fallen down on the monitoring of an organisation's activities once charitable status has been obtained. As we have heard and know, few charities have submitted their annual reports and, of those, few were audited or examined in detail.
If the commission becomes more circumspect, we should see a considerable tightening of control of charities which will ensure that they operate in accordance with the aims detailed in their constitutions and that their accounts are audited and properly presented. That should also eventually benefit the charities themselves. It will enhance the credibility of the genuine ones and weed out the less desirable.
My interest in the White Paper, as some of your Lordships may have already guessed, is in the effect 577 it might have on cults. Here I am afraid that I must part company with the noble Lord, Lord Houghton of Sowerby: I cannot ignore the Moonies, as I think he suggested. I am encouraged by the mention of them in the White Paper and the apparent desire to bring them under closer control. Regrettably, there seems to be a lack of positive suggestions, as I believe the noble Lord, Lord Mishcon, said. I hope that when the Bill appears such suggestions may become more apparent.
When considering cults, one is tempted to look at them from a religious point of view, although a number of them do not even make a pretence of having a religious basis. That is something which is often forgotten. People always believe that cults are religious. Whether or not that is the case, such an approach leads to a minefield of uncertainties when it comes to defining what is a religion, the consideration of freedom of worship and so forth. That is a road that has been trodden by many people more agile than I. There is another condition for charitable status: that the organisation should act to the benefit of the public interest and should not be morally subversive. I was sorry to hear that the noble Lord, Lord Allen of Abbeydale, did not give that point much credence.
Many cults, with their emphasis on recruiting, fund-raiding and purported self-betterment, are the antithesis of public-spirited bodies and would find it hard to convince the Charity Commission that they exist for the benefit of the public. In the past there has been an almost automatic assumption that religions are beneficial to the public. With the inception of the new so-called religions, that is by no means certain. Many such cults have assumed names, such as the Unification Church, the Church of Scientology, the Children of God and Jesus Army, to take advantage of that outdated assumption. Having put forward a convincing case, I fear that some of them have been registered as charities almost on the nod.
There is another consideration, which is not generally known, that some of the larger cults, such as the Moonies and the Scientologists, have as many as 200 or 300 subsidiary organisations which are not recognised as belonging to the main body. It is quite feasible for one or more of them to apply for charitable status, even if the parent organisation is unacceptable.
I have no legal training, so it is difficult for me to put forward legal suggestions as to how a more credible application of charitable status may be achieved, but I believe that this White Paper is a good start. However, I wonder whether it might be possible for applications for charitable status to be announced in, for instance, the London Gazette, thus giving people at least the possibility of lodging objections before registration is granted. It is a fact that before a charity can be struck off a considerable period of time elapses during which the organisation in question can, of course, continue as a charity and derive all the benefits that go with that status.
In conclusion, I hope that the Bill when it appears will ensure that acting to the benefit of public interest is spelled out clearly and also that the commissioner 578 give due weight to this condition when considering new applications and reviewing existing charities.
§ 7.11 p.m.
§ Lord Butterfield
My Lords, I am speaking in the gap before the noble Lords who are to wind up the debate, and I am most grateful to your Lordships for your indulgence so that I may make just two points. I am also grateful to the noble Lord, Lord Prys-Davies, for yielding to my request to speak now.
I have heard most of the debate. I am one of the very fortunate people in your Lordships' House to have received an immense amount of help from the trusts and from trustees on personal fortunes. That has helped me and my colleagues in the hospitals where I have worked and in the universities. I am very anxious that the record of the debate should include an expression of gratitude from someone who has been so much helped by the charitable impulse that runs through this country. My colleagues and I have been able to start new ventures. We like to believe that we have been able to improve things. We like to believe that we have been able to maintain, improve or extend high standards as a result of charitable dispensations.
Like the noble and learned Lord, Lord Brightman, and indeed the noble Lord, Lord Houghton, I am very worried, as a recipient of so much charity, that the charitable impulse will be blunted by unethical activities. I cannot resist the impulse to ask for your Lordships' indulgence. A very mischievous idea occurs to me which is probably of no use. I should however like to share it briefly with your Lordships.
Your Lordships know that random chance plays a considerable part in many charitable procedures. I suppose that the finding of the numbered ticket in the big drum is an example of that. It crossed my mind —perhaps when we get computerised at the Charity Commissioners —that the sort of procedure that is applied to the Macmillan bonds may be applied to the smaller charities who need to be worried.
I can assure your Lordships that in Cambridge, where I come from, a certain number of people are worried about random tests when driving home in the evening. Some kind of random test about the true nature of charitable organisations applied annually, triennially or, if you go back to the old university methods, quinquennially, might just improve the ethical standards. I am most grateful to your Lordships for your indulgence.
§ 7.14 p.m.
§ Lord Prys-Davies
My Lords, this has been a valuable and constructive debate. I am sure that the Government will give serious consideration to the constructive suggestions and ideas expressed by almost everyone who has spoken. At the outset I join other noble Lords in paying full tribute to the noble Lord, Lord Allen of Abbeydale, for having initiated the debate. The noble Lord has done so much over the years to bring to the attention of the House, and, through this House, to the attention of the public, the problems which exist in this area and which have 579 yet to be resolved. It is however reassuring that the noble Lord has welcomed the White Paper.
It is also significant that the noble Lord, Lord Renton, has spoken. The noble Lord is one of those who fashioned the 1960 Charities Act. I am very conscious that the noble Lord, Lord Nathan —for me, the son of Lord Nathan on charities —has also made his contribution to the debate.
Some of us became fully aware that something radical needed to be done at the Charity Commission when we were privileged to serve in 1983 and 1984 on the Select Committee on the parochial charities and the small charities Bill, under the noted and wise chairmanship of the noble and learned Lord, Lord Brightman. It also remains fresh in my mind how concerned, indeed, how alarmed, we became as we listened to the evidence —in particular, that of the Charity Commission and the Home Office —about the commission's approach to its task. Giving all due allowance, as we had to do, to the shortage of resources, the lack of trained staff and even the lack of a computer, which the commissioners had been requesting since 1981, it seemed to us that the commission's approach was dismally inadequate.
The noble Earl the Minister has reminded the House that at the core of the White Paper are proposals giving the Charity Commissioners new powers in dealing with management, mismanagement, malpractice and abuse. All registered charities will be required to submit fuller and, except for the smallest charities, audited accounts to the commission each year. My noble friend Lord Mishcon spelled out clearly the new tasks to be discharged by the commission and their implications.
I must confess that I too am troubled that the commission will exercise its new monitoring and investigative role at the expense, at least to some extent, of its advisory services to trustees. I am troubled that that should be so. We have heard that in land transactions the trustees will have to apply a do-it-yourself procedure, as outlined in the White Paper. I feel that to rely on the do-it-yourself procedure may pose problems for small charities and could be counter-productive.
I have been acting for over 100 small charities in the valleys of Glamorganshire. I am sure that the noble Lord, Lord Butterfield, will appreciate the contribution that has been made by those charities —for example, in recreation grounds and welfare halls —to the well-being of South Wales. That has been my experience. The trustees of these small charities, giving generously to their task, are often unaware of the legal responsibilities which are carried by trusteeship. That conclusion is amply borne out by the evidence of the Home Office to the Select Committee in 1983 and 1984. That conclusion is not surprising when one bears in mind that trustees in the valleys of South Wales —I am sure this must also be the case in parts of England and Scotland —more often than not have no legal accounting, banking or even business experience.
580 The House will need to reflect carefully in this regard on the words of the noble Lord, Lord Nathan.
Many trustees tend to treat the assets of a charity as if they were private property, but private property which is being used for public purposes. Having made that assertion, I should refer the House at least to one incident. A year ago it came to my knowledge that the sole surviving trustee, acting with the widow of a deceased trustee, wound up a charity and transferred the assets of about £2,500 to one of the national charities. This was done without consent. So the charity was wound up. I wonder whether this is one of the 10,000 charities that the National Audit Office has not been able to trace.
I have a feeling that the need to obtain the Charity Commissioners' consent for land transactions should be retained as regards small charities, at least until the new system has had time to settle down, if not for an even longer period. I believe that that is the view of the chief executive of the coal industry social welfare organisation who wrote to me recently. The letter states:I believe the removal of Section 29 consent to be a retrograde step and is probably based on ignorance of how many small charities operate with lay trustees who perhaps do not fully appreciate their responsibilities".Moreover, it seems to me that the submission of an application for consent is at least an opportunity for the Charity Commission to know what has been happening and what is happening. I fear that as the strategy of transferring more and more responsibility to lay trustees of small charities comes to be worked out and tested, it will become clear that it may not work out as well as is hoped. I say this kindly but I believe it is common ground that the Charities Act 1960 has been hampered by persons holding the office of trustee of a charity who lacked expertise or awareness of the tasks involved. However, if under the proposed legislation more responsibility is transferred to trustees, such persons will be even more at sea than they are at present.
I appreciate that safeguards will be built into the Bill but I believe that inevitably difficulties will arise. In my view there is a strong case for moving slowly in relieving the Charity Commission of its involvement in land transactions for small charities.
There is general support for the commission's new powers, particularly the power to appoint a receiver and manager, the power to exercise its scheme-making powers without an application by the trustees and the power to transfer a charity's assets to another charity. When the Minister replies will he tell us whether the trustees will be able to make representations against the use of those powers? Is it envisaged that the trustees will be able to appeal against the commission's decision, or is it the case that the trustees will have to involve the judicial review jurisdiction of the High Court, assuming of course that the trustees of a small charity will have the funds to do so? Perhaps the Minister can throw some light on how those powers will be exercised and on the future locus of the trustees.
I now come to an issue which has not surfaced in the course of the debate. Should not trustees of a charity have the right, with the consent of the Charity 581 Commissioners, to transfer land or buildings belonging to the charity to another charity at less than market value? That question is raised in paragraph 71 of the Charity Commissioners' report for the year 1988. The paragraph states:We detect increasing pressure on charity trustees, when they are disposing of surplus land or buildings, to make them available for socially useful purposes which are outside the scope of the trusts… By refusing to sell to an organisation established to promote a worthy local cause at less than full market value, the trustees are often perceived as acting contrary to the public interest and in an 'uncharitable manner' ".It seems to me that the commissioners are acknowledging the existence of a growing problem. However, in the next paragraph of their report the commissioners go on merely to reproduce the existing law, which is that trustees must sell on the best terms in the interests of their charity alone. One wonders whether it is possible in this kind of situation to have a compromise between the wishes of the trustees and the local community on the one hand and the doctrine of the law on the other hand. In Wales this problem nowadays arises where the trustees wish to dispose of an empty chapel, a manse, a welfare hall or a recreation ground when they are no longer required for the original purposes of the charity. The trustees would wish to sell below market value to another trust which is under another head of charity serving the local community but which cannot afford to pay the price on the open market. Speaking for myself, I would urge that the new Bill should allow for a more flexible approach by the commissioners in this kind of situation.
Having regard to the substantial changes in social conditions which have taken place since such trusts were founded and which are continuing to take place, we would strongly urge that the position which is reflected in paragraph 72 of the Charity Commissioners' report is no longer satisfactory. I have dropped a few hints to the Government and I should be grateful if the Government could give consideration to that point.
It remains merely for me to say, like my noble friend Lord Mishcon, that we welcome the Bill very much. We hope that there will be an early opportunity of implementing the proposals.
§ 7.30 p.m.
My Lords, as a number of noble Lords said at the end of this debate, we have had a most interesting discussion. The Government are very grateful to noble Lords for what they said. The whole purpose of the debate was to find out your Lordships' views, and your Lordships have not been slow to give them. I was glad to hear that in the majority of cases your Lordships approve of the Government's initiative.
I am very grateful to my noble friend Lady Elliot for saying that she approves of what we are doing. I recognise that she has been connected with charities throughout her life. She also said that there are no political divisions. That is absolutely right. We have all been seeking the right way round the problem. Many noble Lords have had long experience with charities. I was grateful to the noble Lord, Lord Butterfield, who described himself as a recipient of 582 charity. I have no doubt that that disturbed the noble Lord, Lord Houghton, though perhaps the noble Lord did not mean exactly the same as the noble Lord, Lord Houghton.
I join my noble friend Lady Elliot in thanking all those who have given so much of their time to charities throughout their lives. In terms of man hours the total effort would be colossal. It is part of human nature to want to give, and the fact that so many people do so so often is a source of great encouragement.
I could not help but be amused by the noble Lord, Lord Houghton. He always amuses us. He objected to paying an extra penny for a Christmas stamp. I thought that a vestige of Scrooge entered the debate. I was interested that the noble Lord remembered his number so well. The only number that I can remember is the number I was given in the army when I did my national service. That is indelibly printed on my memory. Unfortunately, that does not have the draw of the noble Lord's charity number. I doubt whether the noble Lord will find many ladies in fancy hats coming down his way. I reckon that they would give his house a very wide berth because they would know the kind of reaction that would emanate from the noble Lord if they were to go to him and tell him what he should do.
The purpose of the debate was to allow us to have the benefit of what your Lordships had to say. I have been asked a number of questions and I shall do my best to answer some of them. The noble Lord, Lord Prys-Davies, was concerned about land that belongs to a charity. He said that if a charity wants to sell the land to another charity it ought to be able to do so and should not necessarily be required to sell it to the highest bidder. That is a matter of great concern. It is always difficult to get it right and to be fair. I accept that it can be irksome for charities to have to sell their land to the highest bidder when they believe that there are other factors to be considered.
I believe that the principle involved is a sound one; namely, that the trustees of a charity should act at all times in their charity's best interests. I shall certainly take on board the observatons of the noble Lord but I think that he would agree that a charity should adhere to that fundamental principle.
The noble Lord, Lord Allen, suggested that the graduated accounting bands were too low. The levels suggested in the White Paper reflected responses to the Charity Commission's consultation paper on accounts. Most of those who responded to the White Paper asked for the levels to be higher. We are reviewing the bands in the light of those responses. The noble Lord was also concerned that there should be an exchange of information with the Serious Fraud Office. We have had no difficulty with the free exchange of relevant information on abuse. There is no reason why the Charity Commission and the Serious Fraud Office should not continue to communicate if there are difficulties in that respect.
The noble Lord, Lord Allen, was also concerned about co-operation with the Inland Revenue. The amendment to the Charities Act 1960 under the Finance Act 1986 permitting the Inland Revenue to 583 pass information relating to abuse in charities to the Charity Commission has led to substantial numbers of cases being referred to the commission. Consideration of those cases is continuing. The cases are complex and it will be some time before the results are forthcoming.
§ Lord Allen of Abbeydale
My Lords, perhaps the noble Earl will permit me to intervene. It required legislation to enable the Inland Revenue to disclose information to the Charity Commission. Would it require legislation to enable the Serious Fraud Office and the DTI to give information to the Charity Commission?
My Lords, not to my knowledge. If I am wrong I shall let the noble Lord know.
The right reverend Prelate the Bishop of Chester referred to the very difficult problem of contemplative orders. He expressed the hope that the opportunity which is provided by legislation might be taken to accord charitable status to closed religious communities. We understand the very important role which the closed order communities play in the life of the Churches. We are all sympathetic to the motivation which lies behind the request of the right reverend Prelate. I only wish I could say that we can accommodate him on this matter. However, I am afraid that there are real difficulties in the way of our doing so.
The real difficulty is that the position of contemplative communities is not anomalous, as the right reverend Prelate described it. It reflects fundamental principles of charity law which have been consistently applied by the courts for many years. These principles go to the heart of what is meant by the expression "of public benefit" when it is applied to the advancement of religion. The courts have said that they cannot accept as proof of benefit whatever a particular church may happen to believe about the benefits or efficacy of intercessory prayer. As the leading judgement in the case of Gilmour v. Coates puts it:The faithful must embrace their faith believing where they cannot prove: the court can act only on proof".I believe that the court was endeavouring to say that where the Church is engaged in worship in public there is public benefit, but where there is only the example of private prayer on private premises that in itself is not proof of public benefit. However, those who are of that faith may quite rightly find there to be public benefit.
There are two important concerns behind that judgment. The first is that it ought not to depend on the proposer's view —in other words, the Church's view —as to whether a particular object is beneficial. The second is that in these multi-cultural days the courts could find themselves in grave difficulties were a ruling of benefit to involve in any sense assent to the truth of the religion in question. The only way to put that right —if "right" is the correct word—would be to alter the law. But once one starts to define the meaning of charity one changes the law on charity. Those are very murky waters in which 584 to stray and I do not believe that many people would wish to do so.
On a very different subject but in a similar vein in that it concerns religion, a number of noble Lords expressed concern about cults. The right reverend Prelate the Bishop of Chester expressed his anxiety on the subject. I was grateful to him for saying that the most reverend Primate the Archbishop of Canterbury supported INFORM, which is an organisation that is doing its best to help people who are caught up in cults. The noble Lord, Lord Soper, disliked cults being charities. He said that it was the way in which they acted which was important. That view was reinforced by my noble friend Lord Rodney.
Some noble Lords may have expressed disappointment that the White Paper failed to deal directly with undesirable religious cults. I am immensely sympathetic to the anxieties which abound for those who are caught up in that unhappy problem. We have thought long and hard about how the matter could best be approached. I was glad that the right reverend Prelate said that it would be wrong for the courts to decide what is acceptable and what is not. I entirely agree with him.
However, our way in this country is not to proscribe beliefs but to govern their public expression. People have a right to make a choice of their religious pursuit and they have a right to make a wrong choice. In that spirit, we do not believe that the right approach is to attempt to exclude from charitable status bodies whose objects may offend. I find it difficult to know on what possible basis we can do that. We should be getting into great trouble. The public disquiet arises not so much from the professed objects of cults, which in many cases are quite unexceptional, as from their activities. Their beliefs are in themselves frequently harmless. It is the way in which they are pursued which becomes objectionable. It is here that we believe the law needs clarifying.
The noble Lord, Lord Soper, said that the way in which a religion conducts itself should determine whether it is a charity. It is not always understood that under the existing law the Charity Commissioners have the power to remove a body from the Register of Charities if there is evidence that it is acting in ways which are not for the public benefit. That is an important safeguard and there is a strong case for clarifying the law. The noble Lord, Lord Allen of Abbeydale, suggested that even to do that would be too much. I do not think that it would ever be too much to clarify the law. We do not intend to change the law but simply to make the present position clearer.
The noble Lord, Lord Allen, also spoke about the passage in the White Paper concerning charitable companies. Paragraphs 5.21 and 5.22 of the White Paper raise two questions. The first concerns the adequacy of company law as a framework for charities. Charitable companies are clearly companies but they are not just companies; they are also charities and as such they are regulated by both company and charity law. That dual regime can give rise to uncertainties. Some of those uncertainties 585 have been cleared up in recent companies legislation For example,in the Companies Act 1989 it was established that charitable companies, as distinct from ordinary commercial companies, cannot change their objects without the Charity Commission's authority. However, other grey areas remain. For example, the precise duties and power of a charitable company in relation to its general property have never been settled. The White Paper states that between now and legislation we should look to see whether clarification of those points may be achieved in the Bill.
The second question arises from the increasing propensity of charities to take the form of companies. Our strong impression is that small bodies typically take that route, not because they need to be companies but because their trustees want the advantages of limited liability which incorporation can offer. However, in return for that advantage, charities must take on the whole burdensome business of conforming to company law as well as to charity law.
We shall explore whether it might be possible to establish a new form of incorporation which would to some extent try to limit the liability of trustees without bringing the whole body under company law. It might be possible to do that but our discussions are still at an early stage. We might succeed in killing two birds with one stone. For many small bodies the new form of incorporation, which we have tentatively called the incorporated association, would be considerably more attractive than that of the company. Since that new form would be under the Charity Commissioners' jurisdiction, the problems of uncertainty afflicting charitable companies would not arise.
The noble Lord, Lord Grimond, suggested that charitable status should be confined to charities for the relief of deprivation. I know that that definition has been suggested, but it might deprive our country of the efforts of many charities which do not strictly relieve deprivation but which nevertheless operate for considerable public benefit.
A number of noble Lords, including the right reverend Prelate and the noble Lords, Lord Grimond and Lord Soper, referred to charitable status. The noble Lord, Lord Grimond, wondered whether education was a suitable object to have charitable status. One area in which we particularly sought comments is that of charitable status. One or two of those who commented expressed dissatisfaction with the common law, but the overwhelming message that reached us was that the present system has the priceless advantage of flexibility and that it should be retained. As I said, to try to define charity would be to alter the law and not many people would want to do that. I agreed with my noble friend Lord Renton when he said that we should not, for goodness sake, try to define everything. We would be making a mistake.
There are of course curiosities and anomalies. It is sometimes difficult to understand why one worthy body should have charitable status yet another, which is apparently equally worthy, should not have it, but the fact that the system might be imperfect 586 does not mean that is is necessarily capable of easy improvement. It would be easy to argue interminably and fruitlessly about a new definition, to reach a temporary consensus which would satisfy no one and to find ourselves saddled with criteria which quickly became outdated. That would serve only to distract us all from the real business of legislation, which is to ensure that future supervision of charities is the best that can be achieved.
My noble friend Lord Rodney referred to Section 4(3) of the 1960 Act and I welcomed his support and clarification of that section. He suggested that the Charity Commission should publish its decisions on charitable status. Some important decisions are already published in the commissioners' annual reports, but I shall certainly consider my noble friend's suggestion with the Chief Commissioner.
The noble Lord, Lord Mishcon, and my noble friend Lord Whitelaw suggested that the private sector is suspicious for fear that the more it gives, the less the Government will be prepared to pay towards efforts in the charitable sector. The White Paper states clearly that the Government are not in any sense seeking to withdraw from providing the services of care and support which are rightly their responsibility. I draw the attention of the noble Lord and of my noble friend to paragraph 1.7, which states:nor is it any part of the Government's policy to place on voluntary organisations the burden of delivering the essential services for which it is right that the Government should remain responsible".Although the Government seek to encourage charitable giving and the involvement of charities, they recognise that there is a responsibility in the public sector which is that of the Government alone.
My noble friend Lord Renton was concerned about the recruitment and retention of more qualified legal staff. There was a report by Sir Robert Andrew on the provision of government legal services. The Government have set up a legal management unit to assist them in the recruitment and retention of lawyers in the government legal service. At present the Charity Commission has some 20 legal staff engaged in its work and it is encouraging to note that in the current recruitment round some 10 candidates have offered to work in the department.
The noble Lord, Lord Prys-Davies, expressed some anxiety that the Charity Commission would be so busy dealing with abuse that it would neglect its helping role —all the essential advice which it gives to charities. It is true that there will be a shift in emphasis in the commission's work, but only a shift in emphasis and not a sea change. It will still be there to give expert advice which is very important.
One or two noble Lords referred to television. The noble Lord, Lord Allen, referred to charity advertising. Concerns have been expressed about telethons and other major fund-raising events on television. We are keen to see greater accountability. Legislation covering new forms of fund-raising will be difficult to frame and to enforce for no sooner will it hit the statute book than some other form of appeal will have evolved. However, I understand 587 that, since the White Paper was published, the major organisations have got together with the voluntary sector to work on a code of practice. That is precisely the kind of development which we wish to see. Since the White Paper was published, Children in Need has registered as a charity. Again, that is welcome.
My noble friend Lady Macleod asked whether the well known appeals on television will have to send their accounts to the Charity Commissioners. They will have to produce their accounts and, since these appeals are all large charities, they will have to be detailed.
The noble Lord, Lord Houghton, mentioned television advertising. I think it is right that charities should be free to choose whether or not they advertise in the media. But of course advertisement does not mean a free for all. Charities which wish to advertise will need to meet certain safeguards and the IBA will need to be satisfied that the charity is raising money in good faith. The content, tone and style of the advertisements will be closely regulated and the IBA has set up a group specifically to monitor those developments.
The noble Lord, Lord Mishcon, spoke of unauthorised house to house collections supposedly for some hospital or other charity which in fact sees little or none of the money. Several of the White Paper's proposals should help to put a stop to that. For example, we propose that licensing authorities should be able to refuse a collector's licence where they are not satisfied that the applicant has the authority or permission of the charity in whose name he is collecting. We also propose to make it easier for charities to take legal action to prevent fundraisers from using their name without permission.
My noble friend Lord Whitelaw mentioned payroll giving and various anomalies. I shall certainly see that what he has said is studied with care. The new opportunities which the introduction of payroll giving have opened up are being promoted by the Payroll Giving Association. The Government are keeping in close touch with the association and giving it some tangible evidence of support in the form of a grant to help its activities.
My noble friend also understandably referred to the Government's voluntary sector scrutiny. I think that he would have liked the Government to have conducted a root and branch review of the support of the voluntary sector as a result of the efficiency scrutiny. The scrutiny report is directed more at the effectiveness of the Government's arrangements for funding the voluntary sector. I cannot expand on the report's conclusions at this stage, nor give the Government's response. However, I can assure noble Lords that the Government intend to give the most careful attention to the issues raised by the report.
The right reverend Prelate the Bishop of Chester mentioned the need for trustees to move with the times. He referred to a particular charity within his own city. I am afraid that I do not know of that charity, but I shall ask the Chief Charity Commissioner to look into the matter and write to the right reverend Prelate. He also described the 588 code of practice drawn up by the Churches to help decide when a religious charity was acting in a way which was not in the public interest. I find that particularly interesting and I should be grateful if he would care to let me have a copy of that code.
The noble Earl, Lord Longford, complained that the White Paper does not recognise the difficulty of deciding where to draw the line on political activities. We hold the view that any blurring of the distinction between politics and charity would be very damaging. I agree that in theory it is difficult to define the boundary but, rather like an elephant, one notices it when one sees it. In any event, most charities do not find it difficult to draw that line and in cases where they do, the commission is there to help and guide them.
The noble Lord, Lord Grimond, said he hoped when the Government produced the Bill it would be intelligible. I do so agree with him. Even if it is, I doubt whether it would make my comprehension of it complete. However, I shall certainly bear in mind what he said. The noble Lord was also concerned about Scotland. He thought that some charities might escape from the Charity Commissioners and end up in Edinburgh, as though Edinburgh were some kind of sinecure for charities which were trying to escape. I do not think he meant to give that impression. However, I do not think that that will happen any longer as my right honourable friend the Secretary of State for Scotland announced in October that we intend to legislate to plug that escape route in future. Escaping charities will be caught by the Lord Advocate.
My noble friend Lady Faithfull asked how many charities have been amalgamated under the 1985 Act. In the three years from 1986 to 1988 the commission received 609 resolutions made under the Act. Of those the overwhelming majority —447 of them —was made under Section 3, which dealt with charity amalgamations; but there were 77 under Section 2 and 85 under Section 4. She asked me how many had not amalgamated. I am afraid that the answer is that I cannot tell her.
The noble and learned Lord, Lord Brightman, asked why we could not extend the financial limits of Section 3 now by negative resolution under Section 5 of the 1985 Act. He asked whether it could in fact be done by a statutory instrument. The answer is that it could be done by a statutory instrument. However, in practice, one of the main obstacles to charities who want to use the Act has been the cumbersone procedures which trustees need to go through. We think it best to simplify those procedures and extend the Act at the same time.
My noble friend Lady Faithfull asked about Oxfam and political activities. I understand that the charity commissioners are at present considering several complaints under political activities by Oxfam. I do not think that it would be proper for me to comment other than to echo her regard for the excellent work done by that charity. I should clarify one point. If a charity strays into the political arena, it does not mean that it would forfeit charitable status. Rather it would be for the 589 commissioners to ensure that the trustees mend their ways.
My noble friend Lord Renton asked about charities receiving the money before the professionals got at it. Those were not his exact words but my paraphrase. That is precisely what we propose to do. In case there are anxieties, I should say that we do not envisage that local branches of a charity should have to pay out the proceeds of fund-raising before deducting the expenses. It is the professionals whom it is important to get at, as it were. The charity would then pay the professional direct and could control how much is paid.
My noble friend also hoped that, when it comes, the Bill would be narrow in scope. That is our approach. It should be evolutionary. By that I mean that we would preserve the basis of the 1960 Act, which my noble friend helped to pilot through another place. Having said that, the opportunity for charities legislation does not occur all that often, and as I said we shall be listening carefully to ensure that the Bill covers all that it should do.
The noble and learned Lord, Lord Brightman, referred to Mr. Brown in a graphic description. I can tell him that under the new system Mr. Brown would be caught by his failure to supply financial information and accounts.
I am acutely aware that there are other questions which noble Lords have asked me. I think that it would be trespassing upon your Lordships' time were I to answer any more now. I can only say that I am deeply grateful for the concern which has been expressed and the advice which has been given. I can assure noble Lords that all views which have been given today will be carefully taken into account before the Government produce any legislation.
§ Lord Allen of Abbeydale
My Lords, it has been a fascinating debate, characterised by two very agreeable features —(a) it has in no sense been political; and (b) we have not heard one word about interference from the secretariat in Brussels.
It must be very gratifying to the Government that, although a number of points have been raised, the 590 White Paper as such has had a very favourable reception in all quarters. Obviously a great deal of very good work has gone into its preparation. I shall certainly not comment in detail on any of the speeches that have been made. Perhaps I may take up two references which were made to me what now seems like some hours ago. The noble Lord, Lord Mishcon, referred to the fact that I had said that there was no legal definition of charity when I meant no statutory definition. As usual, he was quite right.
The Minister said that I was rather waspish in my reference to previous shortages of staff. That the commission has been understaffed and has not had sufficient resources has been brought out by a considerable number of speakers today. What has not been mentioned is that at one stage not so very long ago the Treasury tried to cut down even on the staff that it has. I believe that it is partly as a consequence of debates in this House that the attack was repelled.
I was interested to hear the noble Lord, Lord Houghton of Sowerby, ascribe the entire responsibility for this sad state of affairs to successive Home Secretaries but there was not a word about successive Permanent Under-Secretaries of State.
I take it from the concluding remarks of the Minister that he will write on points with which he has not been able to deal. One can quite understand that he cannot cope with everything. For example, when the Charity Commission decides that someone is unsuitable to act as a trustee because he has previous convictions, how is it to know that he has previous convictions? Is the blanket rule to apply to charities which deal with former offenders?
I shall not delay your Lordships any further. I shall go with the comforting reflection that it will not fall to me to propose a sixth debate on charities but that the next one will be the Second Reading of the charities Bill. It is likely to be rather more extensive than the noble Lord, Lord Renton, had expected. I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.
House adjourned at two minutes past eight o'clock.