COMMONS AMENDMENTS (Hansard, 25 October 1990)

§ Lord Fraser of Carmyllie
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 1 and 2. I shall speak also to Amendment No. 39. The new clause was introduced in response to an amendment tabled in another place to require banks to identify accounts of recognised bodies which had lain unused and to require the Inland Revenue to list such bodies. The object was to allow moribund charitable funds to be brought back into use. This principle was warmly supported and the Government undertook to explore with the banks how such monies might be brought back into charitable use.
The Committee of Scottish Clearing Bankers and the Building Societies Association were co-operative in exploring how moribund charitable funds might be brough into use. The clause removes any duty of confidentiality from the relevant institution in respect of dormant accounts and enables them to inform an authorised person—the Scottish Charities nominee —of such accounts. They will pass to the nominee details of the account holders' funds and information as to the founding document. The nominee is to be satisfied that the account holders are recognised bodies. He will be concerned only with those that are recognised bodies. The nominee will have a right to effect transactions in respect of accounts.
Amendments Nos. 1 and 2 are consequential. They enable the Inland Revenue to pass to me details about moribund charities whose accounts have been dormant and have been referred to me in the first instance by the Scottish Charities nominee. In some such cases the Inland Revenue might be the only body to have details of the trust deed of such a body. Without this provision it would be unable to provide me wit h the necessary information.
Given the assurances and co-operation of the relevant institutions I am confident that this new provision will prove a very worthwhile innovation in ensuring that good use is made of charitable funds.
Moved, That the House do agree with the Commons in their Amendments Nos. I and 2.—(Lord Fraser of Carmyllie.)

§ Lord Morton of Shuna
My Lords, on the face of it the idea included in Amendment No. 39 is good. However, it illustrates the point to which my noble and learned friend Lord McCluskey has already referred. It is quite ridiculous that a new idea which has never been considered for English law should suddenly be introduced into a Bill. Although the principle was discussed in Committee in another place it was introduced only last Tuesday in an amendment.
Amendment No. 39 runs to almost three pages of closely-typed print. The way that the matter has been put forward makes it impossible for this House to give it detailed consideration. However much we might approve of the principle of the new idea it is iniquitous to be asked suddenly to agree someone's drafting without any real consideration of all the various issues that may be concerned. While I wholly approve of what has happened it illustrates the fact that all the provisions in the Bill relating to charities were rushed through without adequate consideration or consultation with those in Scotland involved with charities. That was done merely because for one reason or another the Government decided that charities should be included in a miscellaneous provisions Bill. It is wholly inappropriate. However, the principle is good and we must see whether the Government's drafting works.

§ Lord McCluskey
My Lords, I join the debate on the general matter of principle. One of the main justifications for the continued existence of this House is that it performs a revising function. People who are experts and impartial and do not have to be looking over their shoulders at their constituency interests are able to bring an impartial critique to hear on the provisions of the Bill,
This is a prime example, but there are dozens of others in these Commons amendments where this House cannot perform its revising function in any sensible way at all. We were told before the start of the proceedings on this Bill that it is intended that Parliament should prorogue a week today. There is no possibility of discussing this massive amendment to the Bill in any sensible way in this House. That will be true not just of these provisions but of a great many others.
I have a great deal of confidence in the draftsmen in the Lord Advocate's office, with whom I have had the privilege of working in the past. However, draftsmen can and do make mistakes and this Bill has seen many such mistakes. Bills like this need the critical examination of your Lordships and that cannot be given to a Bill brought before us in this particular form with entirely new provisions of this character.

§ Lord Cameron of Lochbroom
My Lords, I have always been a firm believer in the adage that a bird in the hand is worth two in the bush. I must commend these amendments. They seem to add an important and sensible new provision to this part of the Bill.
I should like to make one remark which affects the whole of this part of the Bill. In Part I we are making very important changes to charity law in Scotland. We have always recognised that in this House. They will 1537 involve new duties and obligations upon trusts and trustees. I am aware that, if the Bill becomes law, the provisions in this part of the Bill will not be brought into effect until such time as the Secretary of State, by order, determines. However, I urge the Government to allow proper time for trustees to understand what are the implications of this Bill and these provisions as regards technicalities and also to allow guidance to be issued in order that, when this part becomes law, those who must deal with charities will be fully aware of what is involved.

§ Lord Macaulay of Bragar
My Lords, I add my welcome to this new provision. I agree with what has been said by the noble and learned Lords, Lord Cameron, Lord Morton and Lord McCluskey. It is a large clause with great implications. However, it is an imaginative step which could lead to the uncovering of much money in the bank vaults of Scotland which is presently being lost to charities. Within a short time now, that could be rechannelled and put to positive use in the community.
One matter has been drawn to my attention as an example of why this clause requires closer attention, albeit that the principle is accepted on this side of your Lordships' House; that is, as far as I have been able to ascertain in the short time which I have had to consider the amendment, it may well be that the 20-year prescription in favour of the banks in relation to dormant charities is too long. It is not clear from the clause what will happen—and I am not saying that it will happen since the noble and learned Lord Advocate has said that he has complete co-operation from the banks and clearing houses—if there is a massive amount of charity money lying dormant to which a bank has acquired a legal right by the exercise of the prescription. What is to happen to that if the institution is required under this clause to hand over to the Scottish charities' nominee the fund lying in its vaults and the bank says, to put it colloquially, "You're not on. This is ours"?
What power exists in the clause as it stands for the nominee to take action against the bank if the bank does not choose to co-operate with the nominee? One would presume that a bank would not lay claim to a charitable fund, but we are living in very commercial times. Perhaps 30 years ago a bank would not have done that but it cannot be said that the banks can be trusted not to do so nowadays.
Clause 10 states: The Secretary of State may, by regulations made under this section—(a) make provision as to the procedure to be followed by the nominee in exercising his powers under this section". His powers under "this section" are spelled out in the previous subsections and nowhere there can I see any right for the nominee to take action in any court, whether it be the sheriff court or the Court of Session, to recover any funds to which he decides he has the right in terms of this clause, if it is enacted.
I suggest also—and perhaps the Government might consider this—that a period of 10 years is reasonable. It may be better to shorten that because, if I am 1538 correct—and I do not say that I am correct about the running of the prescription against the charity fund —at this moment that prescriptive right might be running in favour of the banks. Has the noble and learned Lord the Lord Advocate any information or estimate at this stage as to how much money might be recovered by the exercise of this admirable clause now proposed for insertion into the Bill?

§ Lord Fraser of Carmyllie
My Lords, although there has been complaint about the time at which this measure has come before the House, I am grateful that such a broad welcome has been given to the proposal.
I should say to the noble Lord, Lord Macaulay, that there is no provision within this proposal which would affect the law of prescription. I must say that the situation is not entirely clear when one looks at deposit or current accounts. However, it is no part of this provision to change that law.
I should emphasise, as I did in opening, that every indication which we have had from the banks and clearing institutions in Scotland is that far from trying to get their own sticky little paws on to these funds, they are extremely anxious to do what they can to ensure that the funds are properly applied. They welcome the opportunity now being given to them to be released from the duty of confidentiality which they might otherwise have.
I should say also that it is not yet known how many accounts might be uncovered. However, I am certainly aware on an anecdotal basis that in banks and branches all over Scotland managers and solicitors have accounts in the name of charities where little or nothing is being done. I am fairly confident that this new clause and its accompanying consequentials will prove to be very valuable.