§ 3.9 p.m.
The Minister of State, Home Office (Earl Ferrers)
My Lords, I beg to move that this Bill be now read a second time.
I believe that this is an important measure. I should like to think that it is one on which there will be no division on party lines, or indeed on any other lines, other than to ensure that we get the best possible Act of Parliament in the end. The need for legislation has been widely accepted and it has, I am glad to say, been warmly welcomed, particularly by the charity world.
The system of charities in this country is, in some ways, unique. It is, one could say, something of a national treasure. Charitable giving makes—or perhaps reflects—a huge contribution to the quality of life which we and others enjoy. Charities engage in an immense range of activities. They span the world from the village hall to the tropical rainforest. Some survive virtually without any resources. Some, on the other hand, are multi-million pound international businesses.
By definition, money which is given for charity is for public—and not for private—benefit. Once donated, it enters the public domain. That is why a legal framework exists to ensure that charitable funds are used for the benefit of the community, that trustees apply the highest standards of stewardship and that abuse is prevented.
The Charity Commissioners play a key role in all this, for it is they who are charged specifically with promoting the most effective use of charitable resources. They are, therefore, charged with investigating and checking abuse in the charitable sector.
The world has changed almost beyond recognition since the last major piece of charities legislation was passed in 1960. It is not insignificant that two of those who were primarily responsible for the passage of the Bill are now Members of your Lordships' House. I refer to my noble friend Lord Renton and to the noble 824 and learned Lord, Lord Simon of Glaisdale. As Home Office Minister and Solicitor-General respectively, they propelled the last Bill through another place with great distinction. As a latter day colleague in the Home Office, I hope that I can rely upon what I might describe as their "helpful" influence upon the passage of the present Bill which is before your Lordships today.
The number and variety of charities has grown enormously since 1960, as has the amount of money which is donated to them. There are now over 170,000 charities registered with the Charity Commissioners. A new one is registered every 30 minutes of every working day. At the same time, the resources of the charitable sector continue to grow. It is, by any standards, big business. I said the other day—and I have no hesitation in repeating it—that its turnover is estimated at £17,000 million. Sometimes nowadays people say £17 billion, but I believe that it is much more impressive to say £17,000 million. That is more than the whole of the output of British agriculture. When one thinks that British agriculture is in fact the largest industry in the United Kingdom, one realises that one is not in the tiddly-wink sphere.
It is not surprising, therefore, that the system of supervision under which charities operate should need something of an overhaul. The Charities Bill follows closely the ideas which were put forward in the White Paper Charities: A Framework For The Future which was published in May 1989. But the Bill takes account of the very many constructive comments which we received from all quarters—from your Lordships, from the charitable sector and from others.
The Bill is designed essentially, first, to improve the arrangements for the supervision of charities in England and Wales; secondly, to introduce a measure of control over the activities of professional fund-raisers and commercial participators when they are raising funds on behalf of charities and charitable institutions; and, thirdly, to update the legislation relating to the conduct and the supervision of public charitable collections.
The underlying purpose is to enhance public confidence in the charitable sector by ensuring that charities are well managed and properly regulated. It is not a question of increasing bureaucracy, which none of us wants; but it is a question of ensuring that there should be a regime which will result in the public having confidence in the charitable sector.
We think that the best way of maintaining the public's goodwill is to ensure that every charity is accountable, publicly and openly, for the manner in which it conducts its affairs and that, in the rare instances where abuse or serious mismanagement occur, these matters are promptly investigated and those responsible called to account.
The provisions in Part I of the Bill, therefore, seek principally to enhance the existing powers of the Charity Commission so that it can identify, investigate and remedy abuse when and where it is found.
That has resulted in us proposing to amend substantially the 1960 Act so as to modernise and to extend the commissioners' existing powers and to relieve them of certain of their statutory duties. The 825 resources, which will thereby be released, will he available for redeployment on monitoring and investigation.
Clause 2 arises out of the proposal in the White Paper that it should be clear that the commissioners have the power to refuse to register a body—or to remove it from the register—where it is acting in pursuit of its objectives in ways which are not for the public. benefit. In essence, it amends the law so that the court and the commissioners, in determining whether an institution is charitable, may take into account its past, present and intended future activities before coming to a decision.
One of the commissioners' main tasks under existing legislation is to maintain a register of charities in England and Wales. That will not change. Indeed the register will be enhanced and it will become an even more important source of information relating to charities. There are three changes made by Clauses 3 and 4: first, the commissioners will be able to include such information relating to registered charities as they think fit; secondly, the income limit below which charities are not required to be registered is raised from £15 per year, which is clearly out of date, to £1,000 per year—that is one category of excepted charity; and, thirdly, registered charities must state the fact that they are registered in the fund-raising literature and in certain other financial documents so that the general public will be aware of the fact that the organisation is a registered charity, and that it is therefore subject to the scrutiny of the Charity Commission.
Under Clauses 5 and 6 the commissioners will have power, for the first time, over the names by which charities are known. They will be able in certain circumstances to direct a charity to change its name. That will help to eliminate the confusion which can sometimes arise and will also prevent the unscrupulous from attempting to exploit another charity's good name for their own benefit.
With Clauses 7 to 13 we come to the first of the key areas of the Bill. The commissioners are empowered, under Section 6 of the 1960 Act, to institute inquiries with regard to any charity other than one which is an exempt charity. Under Section 20 they can take various measures to protect charity property.
The new powers will enable the commissioners to take action more quickly and will give them a wider range of means with which to protect charity property. Most significantly, under Clause 9 their powers to protect charity property are to be extended. First, there are powers which can be exercised at any time after the institution of an inquiry where the commissioners are satisfied that there has been either misconduct or mismanagement in the administration of the, charity or that it is necessary to protect the property of the charity.
Those powers include the commissioners' existing powers to freeze bank accounts, to restrain the actions and transactions of trustees and others, to suspend them, or to vest the charity's property in the Official Custodian for Charities. But they will be enhanced by new powers. The purpose of such powers is, first, to restrain debtors of charities from parting with money 826 which they owe to the charity; secondly, to appoint additional trustees to the charity to secure its proper administration; and, thirdly, to appoint a receiver and manager of a charity's property and affairs. The last of these powers would be used, for example, where there was evidence that the administration of a charity had completely broken down.
Further, there are to be powers which may only be used where there has been both misconduct or mismanagement and where it is necessary to protect the property of the charity. Under those powers, the commissioners will be able, as now, to remove trustees or others. They will also be able to make a scheme of their own for a charity which is under investigation. Such a scheme might for example make provision for its property to be transferred to another charity.
Clause 11 enables the commissioners to petition the High Court for a charitable company to be wound up. Clause 13 provides for the commissioners to exercise most of their powers of investigation and protection over Scottish charities which are managed or controlled wholly or mainly in or from England or Wales.
Next comes a group of clauses covering powers relating to the administration of charities. Among other things, they make it easier for applications for schemes to be made to the commissioners and for the commissioners to take the initiative where they are satisfied that the trustees should apply for a scheme in the interests of the charity and have neglected to do so.
Appeals for funds for specific purposes—perhaps a new swimming pool or a hospice—may sometimes fail to reach their target. In other cases more is raised than is actually needed. Where that happens, a problem can arise as to what to do about the shortfall or the excess. The existing procedures in the 1960 Act for dealing with such problems will be streamlined so that the money given can be used for charitable purposes more swiftly than is now possible.
The investment opportunities which are open to charities will now be increased by giving the commissioners power to make schemes establishing common deposit funds. When a charity invests in one of these, it will be entitled to the repayment of the sums which it deposits plus interest at a rate which may be determined under the scheme. The commissioners will also be able to authorise the trustees of a charity to make ex-gratia payments out of its funds where the trustees feel themselves under a moral obligation to do so.
Your Lordships will know that a good deal of anxiety has been expressed in recent years about the possibility of charitable moneys lying idle in dormant bank accounts. Clause 19 will enable the commissioners to direct the transfer of funds from such accounts to other charities having similar objects to those of the charities to which the moneys were originally donated.
Clauses 20 to 28 create a new accounting and audit regime for charities other than for exempt charities and for charitable companies which are subject to other regulatory frameworks. The trustees of all charities other than those which I have mentioned will be required under the Bill: to keep proper accounting 827 records; to prepare accounts, the form and content of which will be set out in regulations to be made by the Secretary of State; and to have the accounts audited or, in the case of a charity with an income not exceeding £100,000, independently examined.
The trustees of registered charities, including charitable companies, will be required to submit their accounts together with an annual report of the activities of their charity. Trustees of excepted charities will be required to submit their accounts to the commissioners when they are specifically requested to do so. Accounts will have to be available for public inspection, and members of the public will be able to obtain copies of any charity's accounts direct from the charity upon payment of a fee. The commissioners will be able to require a charity's accounts to be audited in certain circumstances and to recover the costs of such an audit from the private resources of the charity's trustees. It will be an offence to be persistently in default of requirements regarding the submission of accounts.
Another important feature of the Bill is Clause 29. For the first time, the commissioners will be able, with the consent of my right honourable friend the Attorney-General, to take direct action in the courts against defaulting trustees, and they will be able to recover misappropriated or misapplied charitable funds.
Clauses 30 and 31 relieve the commissioners of certain statutory duties by allowing for the official custodian to divest himself of stocks, shares and other property which he holds in trust for charities and to return them to the trustees of the charities or their nominees. That does not apply to land or to property which has been vested in the official custodian under the commissioners' powers to protect charity property.
Clauses 33 to 36 create a new regime for the disposal of charity land, dispensing with the consent of the commissioners where the trustees have satisfied certain conditions before the sale is completed and the disposition is not being made to what is to be called a "connected person".
Clauses 38 and 40 are designed to protect the property of charities which are companies by providing that any alteration to their objects clauses or to any other clause, which restricts the way in which their property may be used, will be ineffective without the prior written consent of the commissioners.
Clauses 41 and 42 replace the present provisions of the Charities Act 1985 which is now thought to be too restrictive.
In future the trustees of any charity, which is neither an exempt charity nor a charitable company and whose income did not exceed £5,000 in its last financial year, will be able to modify its objects, to alter certain provisions in the governing instrument or to transfer its property to another charity having similar purposes by unanimous resolution—subject of course to the commissioners' approval.
Similarly, the trustees of certain charities which are permanently endowed, and whose income did not exceed £1,000 in its last financial year, and which are 828 neither exempt charities nor charitable companies, may resolve to expend their capital as if it were income, provided that they have the commissioners' approval.
Clause 43 disqualifies from being trustees people such as those who have been convicted of offences involving dishonesty or deception, who are undischarged bankrupts and others whose past conduct as a charity trustee was such that they have had to be removed from their trusteeship. It will be an offence to act while disqualified. The commissioners will be able to waive an individual's disqualification in certain cases, for example a charity working with ex-offenders.
Clauses 45 to 55 make various miscellaneous and supplementary provisions. In particular Clause 49 allows the commissioners to charge for some of their services and Clause 52 makes it an offence to provide the commissioners knowingly or recklessly with false information or to destroy documents or otherwise to suppress them.
Part II of the Bill deals with fund-raising on behalf of charities and charitable institutions. Our intention here has been to address the areas of greatest mischief identified in the White Paper. These are, first, the excessive sums which are paid to, or retained by, professional fund-raisers for the fund-raising services which they provide to charities; secondly, the lack of information which is given to potential donors by professional fund-raisers and others; and, thirdly, the inability in many cases of charities to stop fund-raising activities which may be undertaken in their name or ostensibly for their benefit but without their consent.
We propose to make it unlawful for professional fund-raisers and commercial participators to solicit money or property on behalf of a charity, or to represent that a charity will benefit from the proceeds of a campaign or promotional venture, otherwise than in accordance with an agreement with the charity concerned which satisfies requirements to be prescribed by regulations made by the Secretary of State.
Donors must have information about where their money is going and how much of it will reach the charity in question; so professional fund-raisers and commercial participators will have to give prospective donors details of the charities or charitable institutions for which they are soliciting money or purporting to benefit. They will have to give details of their remuneration and the proportion in which the money or other proceeds are to be distributed. It will be an offence not to do so.
Certain types of appeal—those on television in particular —have an emotional immediacy which is not present in other kinds of approach. In certain circumstances, particularly where they have responded to appeals by telephone or television broadcasts, donors will be able to cancel their agreements to pay and to claim refunds.
At the moment charities have little or no control over many of those who raise funds for them. Some fund-raisers use methods which are, to say the least, highly dubious and tarnish the reputation of charity generally. The courts will be able to grant a charitable 829 institution an injunction preventing unauthorised fund-raising which may be undertaken on its behalf. It will be an offence to solicit money or other property for a particular institution on the basis that it is a registered charity where it is not.
The interests of the public, of donors and of charities have to be protected. This is just as true of Part III of the Bill as it was of Parts I and II. Clauses 63 to 72 are designed to make fresh provision for control of public charitable collections.
It will be an offence for promoters to organise, or for collectors to make a collection, without a permit from the local authority or an exemption order from the Charity Commissioners. Collections at public meetings or in places of worship are excluded from these provisions. There will be a right of appeal to a magistrates' court when a local authority refuses to issue a permit or where conditions are attached or varied or where the permit is withdrawn.
Exemption orders will allow a charity, which pursues its purposes throughout the whole or a substantial part of England and Wales, to carry out public charitable collections without the need to obtain permits for collections from each and every local authority in which it seeks to carry out its collection, although it will have to notify local authorities in whose areas it proposes to collect.
This is a fairly extensive and important Bill. It seeks to regulate charities. Charities form an enormous part of our public lives and a large part of most people's private lives. It is important that those who give to charily should know that their money goes to charity.
The Bill is designed to improve and generally to update the law on charity. I have tried to give a résumé of what it seeks to do and I trust that it will have the approval of your Lordships. I beg to move.
§ Moved, That the Bill be now read a second time. —(Earl Ferrers.)
§ 3.32 p.m.
§ Lord Richard
My Lords, at the outset I wish to pay tribute to Sir Philip Woodfield and his committee for their report which formed the basis for the White Paper and the Bill. It was a timely, thorough and detailed examination of the existing laws on charities and fir that we should all be grateful.
We on this side of the House think it right and appropriate that we should have a fresh look at the law relating to charities. Legislation is needed to deal with the small number of bogus charities and dishonest fund-raisers who harm the image of charities in general. It is right too because the charity world has changed fundamentally since the last legislation in 1960. As the noble Earl told the House, there are now over 170,000 registered charities raising over £17 billion—I apologise to the noble Earl for using the word "billion"—a year. Not only that, but they ''requently undertake business activities to raise funds or provide services. More and more they rely upon fund-raising rather than endowments as a source of income. So we accept the need for the legislation and we will on the whole give it our support.
However, the noble Earl will not be surprised to hear that there are matters which will have to be dealt 830 with in detail at the Committee stage of the Bill. I shall, if I may, express some of our preoccupations and concerns at least in general terms today.
Perhaps I may also point out that the problems of charities are problems of growth, not of decline. As the noble Earl said, they represent a major section of our voluntary effort in this country. It is healthy that they are expanding. We should pay tribute to the vigour of this sector of our society. We accept that a modern regulatory framework is necessary. I echo the words of the White Paper which states:It is not surprising given these developments [in the charities world] that the system of supervision under which charities operate should need some updating".The White Paper also says—and here I am dealing with the Woodfield Report—Its central conclusion was that, while the essentials of the present framework were still necessary, they were in need of extensive reform. The Trustees needed to be more aware of their duties and responsibilities; steps were needed to ensure that the information about charities held by the Charity Commission was accurate and up-to-date; above all, the Commission needed to focus more sharply on dealing with inefficiency and abuse. To achieve this new focus the Woodfield Report concluded that the Commission needed on the one hand new powers and on the other to be relieved of…its present statutory duties".In summing up the Government's approach—I think the noble Earl used almost the same words today—the White Paper stated, in language that I can accept and indeed would approve of on behalf of this side of the House:The Government's overall objective…is to achieve a balance between on the one hand proper control by the Charity Commission and proper accountability by charities, and on the other the freedom and corresponding responsibilities of individual organisations to develop and do business".The crucial test of the legislation therefore is whether it achieves that proper balance between accountability on the one hand and freedom to develop and to do business on the other. Again, broadly, we on this side of the House, with certain caveats that I shall come to later, believe that it does.
Perhaps I may therefore look at the Bill in its present framework and express some of our concerns and those of parts of the charity world itself. I start, as the noble Earl did, with Clause 2. For those noble Lords who have read the Bill, I can only say that it is a clause of almost Proustian complexity. As I read it—and I believe that the noble Earl confirmed this today—it empowers the court or commission to look beyond the terms of the trust deed and examine the way in which the charity is conducted. So far, so good. I understand. Not only that, but, as I read it, the clause says that even if the activities of the institution concerned are being carried on wholly within the terms of the trust deed, and further, even if looking only at the trust deed itself, the purposes would be held to be charitable, nevertheless the court or the commission, looking at the manner and circumstances in which the purposes of the institution are being carried out, could conclude that, although prima facie and in accordance with the terms of the instrument of trust, they were being carried out as a charity, those purposes were not charitable.
The noble Earl said that the court or commission could decide in those circumstances to conclude that 831 an institution should not be registered as a charity because it was not in the public interest or public benefit. If that is right, then this difficult clause gives very wide powers indeed to the court or to the Charity Commission. While I am not against that in principle, I am bound to ask the Government what precisely they have in mind. I assume that the wording is designed to catch the quasi religious trust or a business operating under the cloak of a charitable trust instrument whose end purposes are not charitable. If so, I should have liked the Government to give further guidance as to the circumstances in which an apparent charity operating solely within the terms of an apparently charitable trust deed can nevertheless be held to be an institution not established for charitable purposes and therefore not eligible to be registered. If it is a public interest test that is to be applied, in what circumstances? Or is it intended that it should be left to a court to decide on general principles? I know not what they would be in any given set of circumstances. Or is it intended that the commission should decide?
It is rather like the length of the Lord Chancellor's foot which, with deference to the noble and learned Lord who is no longer present, may have done us very well in mediaeval times. However, the law even in the Chancery Division seems to have become more precise as it has become more contemporary. I hope that when the Minister replies he will be able to enlighten us a little on what the Government have in mind on this public interest test.
I turn now to the regulatory powers in the Bill. By and large, we support them. We recognise that the Government have made a serious attempt to distinguish between those obligations appropriate for larger charities and those lesser obligations sought to be imposed on the smaller ones. As I understand it, Clause 21 provides that all charities must prepare accounts in accordance with regulations to be issued by the Secretary of State. I have no problem whatever with that responsibility. It is right that there should be such a provision in the Bill. Trustees of charities with a gross income below £10,000 per year may choose to prepare, instead of full accounts, a receipts and payments account and a statement of assets and liabilities. I assume that charities with a gross income of more than £10,000 a year will have to prepare proper and full accounts.
Charities with an annual income, or a total expenditure, of more than £100,000 must undergo a professional audit. Again I have no problem with that provision. Charities with an income below that figure will be examined by an auditor or an independent examiner. I am not sure what kind of person the Government have in mind when they refer to an independent examiner. Does such a person have to be a professional accountant? Presumably he must be independent of the charity itself. One assumes he should be able at least to read a balance sheet. I should be grateful for some further clarification of the Government's thinking about how the provision will work as the charities themselves are primarily concerned with the practicalities of the Bill.
In addition to preparing accounts, all charities will 832 have to submit each year an annual report in accordance with regulations to be issued by the Secretary of State. The annual report should describe the activities of the charity during the year and give other information relating to the charity or its trustees and officers. The report is to be transmitted to the commission within 10 months, together with the accounts and the audit report or certificate. That means 170,000 annual reports will be placed before the commission each year. That appears to be a major burden on the staff and the resources of the Charity Commission. How many extra staff will the commission have to recruit?
The financial memorandum to the Bill seems somewhat sanguine about this matter. I should like to receive reassurance. The operation of these new procedures will involve additional resources. I am not at all confident that the Government are prepared to fund those resources properly. If they are not prepared to do so, the Bill's provisions will place an imposition on the Charity Commission which I am sure that worthy body could well do without.
Is the commission content that its future resources will be sufficient to meet the task? Is the Charity Commission agreeable to having these burdens placed upon it? The provisions in the Bill for reducing fraud and protecting donors are ones we can support. They are designed to exclude people who have been convicted of an offence involving dishonesty or deception, and bankrupts, from becoming trustees. Those provisions will help to ease co-operation between the Charity Commission and the Serious Fraud Office and other public bodies, and they will give the Charity Commission new powers to protect charitable property. As such they seem sensible provisions.
Clauses 41 and 42 enable small charities to merge and enable the very smallest charities to spend their capital. Again we accept that these are sensible provisions and the income limits realistic. Similarly the removal of the requirement for the consent of the commission to the disposition of land held in trust for a charity, subject to certain preconditions, seems a sensible provision in the light of recent developments. However, there is not universal agreement on the matter.
The Almshouses Association stated on 13th November in relation to this part of the Bill:Curiously after the teeth of the earlier clauses the Charity Commissioners now propose to remove their dentures to provide a loophole for unscrupulous Trustees. Our Association recommends that where Almshouse property is held for the benefit of local people in need disposal should always be subject to Public Notice and the Consent of the Commissioners".On this matter I cannot refrain from referring to Clause 49 which requires the payment of fees in respect of certain prescribed functions of the commissioners and in respect of inspection of the register of charities and the supply of extracts from it. On the face of it one may think that that is not a bad idea. The danger is that the provisions may discourage charities from seeking advice and assistance. I wonder whether it is necessary to introduce such charges under the Bill. I believe that it is the first time that such 833 charges have been proposed. In respect of smaller charities they seem an extra imposition on top of the burdens of filing an annual return and having their accounts inspected. If the provisions deter charities from seeking advice, they would have an undesirable effect. Moreover, the anticipated revenue is in the order of £300,000 a year. One is tempted to ask whether the provisions are worth it, having regard to the dangers I have mentioned. After all, money which is raised by charities is intended for the beneficiaries of those charities and not for the Exchequer.
It is the fund-raising part of the Bill that has given rise to the major concerns of the charities. It is fair to say that the provisions of the Bill differ considerably from those set out in the White Paper. Charities are naturally worried lest the definition in the Bill with its concept of reward may deter volunteers from helping charities to raise funds in circumstances where those volunteers are reimbursed for their expenses or possibly paid a modest honorarium.
I make my next point in no spirit of confrontation. I genuinely seek to improve the Bill. Are the Government really satisfied that they have this part of the Bill right? Much of the information I have received leads me to believe that the drafting of the Bill is not universally accepted in the charities world although the principle behind it may well be accepted. I seek clarification that it is not the Government's intention to catch voluntary helpers by that provision. In Committee I shall ask the Government to reconsider the drafting of Clause 56 to ensure that voluntary helpers are excluded from the provision.
The term "promotional venture" is a wide definition. It would apply to almost all charity joint ventures. The term "commercial participator" could include trading companies associated with charities. Charities are concerned that, given the way the nature of fund-raising has changed, many of the more contemporary methods of fund-raising would be covered by those definitions. It is being argued that celebrities making appeals on television or radio, or through direct mail or trading catalogues, would be classed as professional fund-raisers under the terms of the Bill. Soliciting for funds by personal contact or by telephone contact might again be caught by the definitions I have mentioned.
I cannot believe it is the Government's intention that bona fide activities of that kind, carried out on behalf of a charity, should be subject to the same stringent protections as those imposed on professional fund-raisers in the ordinary accepted sense of the word. I am by no means certain that the drafting of the Bill is sufficiently precise. I hope the Government will take that point seriously. We shall return to it in Committee.
Clause 58 requires professional fund-raisers and commercial participators to give details of the charitable institutions for which they are soliciting money. They will also be required to give details of their remuneration and the proportion in which the money or other proceeds of a campaign or promotional venture are to be distributed. It will be an offense to breach those requirements.
834 The charity world is concerned that the clause could well lead to a reduction in fund-raising and donations as agents acting for charities, such as direct mail companies, would be required to state details of the method by which they are being paid. At one stage there was much discussion about a regulation, or some form of legislative instrument, which would compel fund-raisers to hand over the whole of the money raised to the charity concerned before deducting their expenses, even if it were accepted that those expenses were fair and legitimate. That does not appear anywhere in the Bill. I therefore ask the Government whether it is their intention to cover that point by regulation in due course.
The provision that commercial participators using telephones for appeals and trading must write to donors giving them the right to cancel could also hit fund-raising and trading by telephone marketing companies acting as agents for charities. The provisions of Clause 59 giving donors 14 days to cancel agreements to pay in response to a radio or television appeal could have a similar effect.
I am convinced by the representations that have been made to me that it is not the principle behind the provisions which worries the charities but the practicality of the clauses and how they will be implemented in practice. I hope that the Government will be prepared to listen to representations of individual charities or associations of charities on that point. I understand what the Government have in mind and I agree with the thrust of much of it, but there are dangers here and we need to be assured that the Government have the right balance in this part of the Bill.
Part III of the Bill relates to public charitable collections. As I understand it, most of the clauses apply not just to collections made for charities but also to collections made for any charitable purpose. Hence they will apply to voluntary organisations or individuals involved in public collections. The difficulty here is again primarily one of definition. A public charitable collection is defined as an appeal to give money which is made in any public place or by means of visits from place to place, whether they are public places or not. The only exclusions are appeals made in the course of a public meeting, in a place of worship or through the use of static collection boxes. A public place is defined as,any highway and any other place to which, at any time when the appeal is made, members of the public have or are permitted to have access, whether on payment or otherwise".I am worried about the breadth of that definition. For example, if I were to stand in the foyer of an office block in which I work appealing for sponsorship and passing round a sponsorship form for a sponsored walk, or perhaps in my case a sponsored slim, as I understand it, when I collect the money, that would become a public collection for which I would need a licence. If I, as the collector, did not have a proper licence I should have broken the law and be guilty of an offence. I cannot believe that that was the Government's intention.
The breadth of the definition in that part of the Bill will cause problems. It will certainly increase the bureaucracy in local charity. It will cause a substantial 835 decrease in informal fund-raising through coffee mornings, sponsorship and so on. That is a matter to which we shall have to return at a later stage in the Bill.
Many of these points are for the Committee stage. On the general theme of the Bill we support the Government's expressed intentions. The law on charities needs to be revised in the light of contemporary experience. The possibility of fraud needs to be considered. The powers of smaller charities need to be brought up to date and the responsibilities of the Charity Commission need to be set out in detail. However, the other side of the coin is that in addressing those obvious needs the Government must ensure that the burdens placed on charities and the inhibitions placed on fund-raising do not result in a decline in voluntary activity.
This is a giving nation. The voluntary sector is one of which we can, as a country, be distinctly proud. I should be sad if, in their laudable attempts to bring the law up to date, the Government were to damage that sector, either by imposing excessively onerous burdens on the trustees of charities in terms of their obligations to report to the commission or, just as important, by hampering their ability to perform what is after all the primary function of a charity—raising money for people who are in need.
§ 4.54 p.m.
§ Lord Browne-Wilkinson
My Lords, all noble Lords will know from their own experience the hesitation with which I rise to address the House for the first time. I am well aware that I am not familiar with the idioms and atmosphere of the House which are so crucial to speaking in a persuasive or interesting way. My anxiety is increased by the fact that I am a technician—a lawyer—speaking on a technical Bill and that that is not calculated to fill people with enthusiasm. Nevertheless, because I have had certain professional experience in this field, I thought it appropriate that I should say one or two words today on the Bill. I hope that your Lordships will indulge my ineptitudes.
There are two points which I want to make. The first is a point of principle, possibly the only point of principle raised by the Bill. It is a point to which the previous speaker referred and it is raised by Clause 2 of the Bill. Those who have anything to do with charities, either in practice or legally, know that the altruistic world of charity has attracted some rather grubby elements—people who exploit the status of charities not for altruistic ends but for personal interest. The Bill addresses two instances of that which are well known: that sector of the professional fund-raising industry (and it is only a sector and not the whole) which charges excessive remuneration for its services, and the street collection which is not always conducted with total probity. There is a third sector of parasites on the altruistic world of charity which I should like to examine for a moment and at which I believe Clause 2 is directed.
There are what might be called the white-collar parasites who use the structure of charities and the 836 exemptions which they enjoy to achieve personal benefits. Their activities are based on the fact that under existing law the legal status of a charity is determined once and for all by what is set out in its written constitution. If the words state the purpose to be a charitable purpose that is the end of the matter: it is a charity. That fact has been exploited now for many years by people who use a tame charity, incorporated and frequently registered as being for charitable purposes, which de facto they control by the ability to appoint and remove the trustees. There are many manifestations of that particular device which are to be found in many different fields.
A typical example is the sole shareholder of a company who wishes to keep control of the company although apparently not doing so. A controlling shareholding is transferred to the trustees of a tame charity and the trust of the charity provides for the income to be rolled up almost indefinitely. Control of the company remains ostensibly with the trustees of the charity but de facto the man behind the company remains in control.
There are many other examples. For instance, a club which has a number of activities may, let us say, provide a library for its members. The club's activities as a whole are not charitable but any one isolated part is charitable. Therefore the club hives off the charitable part and sets up a tame charity to promote education through the provision of libraries. The library is then provided for the members of the club at the expense of the taxpayers and to the benefit of the members' subscriptions.
It is that type of arrangement at which I believe Clause 2 is directed. It is directed at a situation where, on the face of it, the purposes declared are charitable, but are utilised for side aims for personal benefit. As such, I strongly welcome the introduction of the provision, but I echo the doubts that have been expressed about the formulation of Clause 2 and hope that it will be considered carefully in Committee because it is the only change proposed in the Bill, the other admirable provisions of the Bill providing a much-needed improved regulatory system.
Clause 2 changes the substantive law of charity. I am anxious as to what its consequences might be, not in relation to those charities that might be called dodgy, but in relation to bona fide charities. I am anxious that there should not be a wide-ranging investigation in the case of every charity, not only of what it has done in the past, but of what it intends to do in the future. I am sure that your Lordships are aware that there is nothing more difficult than to establish effectively what a person's future intentions are. I am sure that the charity commissioners accept that they are not an ideal fact-finding body such as would be required to conduct those difficult findings of fact in order to decide whether a charity should or should not be registered.
The expense of conducting such an inquiry in relation to each charity might be substantial. It must be one of the fears, as with the regulatory provisions, that the well-intentioned provisions of the Bill might increase the load on charitable funds with regard to administrative, legal and other costs in an undesirable 837 way. I therefore suggest to your Lordships that Clause 2 will require careful consideration in Committee in order to ensure that it achieves the objective which, as I understand it, it is aimed to hit, but does not other wise increase the burden on bona fide founders of charities.
I wish to mention only one other point. I mention it with even more diffidence as it is a procedural matter and I am wholly ignorant of the procedure of this House. I do not know whether any other of your Lordships found Part I of the Bill far from ideal bedside reading. As I understand it, the reason is that the draftsman formulated the proposals by way of amendment to the existing Act, the Charities Act 1960.I did a rough count and found that there were 39 provisions in the Bill amending one section or another of the Charities Act 1960, giving rise to some 94 amendments to that Act. I am sure that some Members of your Lordships' House are capable of holding the 1960 Act in mind at the same time as considering the impact of the amendments to it. However, although some of your Lordships may be able to do that, I hope that it will be borne in mind that hereafter, if the Bill passes into law, those who run charities, their advisers and even, if they may be allowed a moment's thought, the judges who have to construe the legislation, will either be forced into a scissor and paste operation, chasing 94 amendments round the Bill, or will have to wait until someone else makes intelligible on a commercial basis what Parliament has not made intelligible.
When an earlier Act is being heavily amended, there is a perfectly good precedent for a Bill, such as the Bill before your Lordships' House today, to contain a schedule setting out the original Act as amended by the Bill. In the smallest office in this country today there will be a word processor capable of conflating two texts and underlining those parts that are amendments and those that are not. I suspect that the draftsman responsible for the Bill has exactly that text on his word processor at this moment and that people in the department will also have it. It might be helpful, both to your Lordships and to those who hereafter must administer the law, if consideration could be given to including in the schedule to the Bill the Charities Act 1960 as amended. That will make it possible to consider Part I of the Bill and to ensure that it achieves the objective that it sets out to achieve, no more and no less. It will also diminish the call on professional advisers' time and consequent expense to charities hereafter.
Your Lordships have indulged me with the courtesy which, in the short time that I have been in the House, I am well aware is a custom of the House. I am very grateful.
§ 4.5 p.m.
§ Viscount Whitelaw
My Lords, I have the great privilege on behalf of your Lordships of thanking the noble and learned Lord, Lord Browne-Wilkinson, and congratulating him on an important maiden speech. Perhaps I may say to him and to many other members 838 of the legal profession whom I am delighted to see have come to support him that I started my political career in desperate fear of anyone involved with the legal profession and have emerged from it at the end with the utmost admiration for them, although it was always tinged by that particular fear throughout. That survived my whole period as Home Secretary and it has survived throughout my life, but the noble and learned Lord has shown us the great importance of the legal brain applied to a Bill compared with the approach of a simple person like myself.
Although I am interested in charities, I could not understand the first part of the Bill, so I simply decided that there was no point in trying to understand it and that I would relate my points to the general principles of the Bill and keep as far away from all the details as I could. In a sensible and wise way, the noble and learned Lord, Lord Browne-Wilkinson, showed me that what he intends to do will perhaps complement, in a very different way, what I shall try to do. We are delighted to have him in this House and to hear what he said. We look forward to hearing the advice which he will give us and which I would have originally regarded with great fear and doubt, but now regard with admiration and as advice to be followed closely.
Since I left the Government almost four years ago, I have spent a considerable amount of my time helping charities with fund-raising appeals. In addition, as chairman of the Council for Charitable Support, I have learnt something about the organisation of charities and about their problems. That experience has taught me that charities occupy an extremely important and valuable position in our national life. When I was Home Secretary, which may seem to many people a long time ago, I became very uneasy about the risks of financial impropriety, with large sums of money being handled without proper supervision. I thought that it would be tragic if, in response to appeals, generous people gave money which was subsequently misappropriated or misused in one way or another.
That anxiety increased when the Government, rightly in my opinion, gave financial encouragement to charities through changes in taxation. At that time—it is still true today —the Charity Commission lacked both the necessary legislative power and the resources required to monitor charities effectively. Nor was it able to help the trustees of charities in the performance of their duties. That was worrying to me when I was Home Secretary and was even more worrying when I came to deal with charities after leaving the Government and discovered what the position was.
However, in recent years, thanks in no small measure to the noble Lord, Lord Allen of Abbeydale, and others in your Lordships' House, much has been done to improve the situation. Sir Philip Woodfield produced his excellent report and the Government wisely followed the main thrust of his proposals in their White Paper. It has culminated in the introduction of this most welcome Bill. I should like to congratulate the Government and my noble friend the Minister of State on producing this legislation which 839 after proper discussion—I shall come to the points of the noble Lord, Lord Richard, which I think are important—will, I trust, be of lasting importance to charity.
I am also particularly pleased that my noble friend the Leader of the House has succeeded in having this Bill started in your Lordships' House. No place is more likely to produce the kind of discussion which will benefit the measure and one which I hope will be detached from any party political point of view. In a Bill of this kind that is enormously important. On whatever side of the House we sit, we are all engaged in trying to make sure that our charitable sector works to the best advantage. We shall succeed only if we approach the Bill from a non-political point of view and are determined to make sure that when the Bill leaves this Parliament it will benefit not only the country but also the working of the charities, as the noble Lord, Lord Richard, very properly said. I am sure that that will happen.
All that can be done in this House. It is a task which, as I have learnt from what to some of those here must seem my very short experience, this House carries out enormously well. That is why I welcome the opportunity to introduce the Bill in this House. I simply say to those who are bent on too great a political discussion in the Committee stage, that it would be wise to remember that it would be a very good thing and in the interests of the country as a whole if this Bill were to become law. I should like all those noble Lords who wish to take a very long time over this Bill to understand that we want to put it through quickly, so that it gets through Parliament next year—and it does not take very much thought to work out when it ought to happen. If it is to be effective, it will be a tragedy if it does not complete its passage before the next general election. We all ought to remember that.
On that basis I would make only two important points at this stage to my noble friend, one of which concerns the financial effects of the Bill. The purpose of this legislation will prove effective only if the Charity Commission is provided with the necessary financial resources to enable it to carry out its duties. I know that the Home Office appreciates that. I just hope that the Treasury will also understand that a niggardly attitude to the whole problem in the long run will be very counter-productive, not only from the point of view of the nation but also from its own point of view.
I have the greatest confidence in the chief charity commissioner. It would be a tragic mistake if, after the passage of this Bill, he and his commission were left short of the funds that they need to carry out their task. I notice that in Clause 49, which has already been referred to by the noble Lord, Lord Richard, it is provided that the charity commissioners may make charges for their services in certain circumstances and that such charges will be paid into the Consolidated Fund. I think—but only think—that I am generally in favour of such charges. I should be more in favour of them if I had certain reassurances about them, which I shall now seek from my noble friend.
840 I am surprised, as was the noble Lord, Lord Richard, that the charges are supposed to yield only £300,000. I do not know where that figure came from or whether it was plucked out of the sky. However, it seems that that is the case. Can my noble friend explain to us how that sum is made up? Perhaps even more important, can he give an assurance that the money raised by those charges, whatever it turns out to be, will be made available to the charity commissioners and not put back in some way into the Consolidated Fund, with a lot of murmuring and muttering about revenue which is hypothecated (which I have never really believed in but is something that one has had to live with over a long period of time in government)?
My second point—I follow the noble Lord, Lord Richard, somewhat in this—is that, in making plans to make sure that there is no impropriety in the management of charities, I hope that the Bill has not gone too far. That may have been a feeling in the mind of the noble and learned Lord, Lord Browne-Wilkinson, as well. There is always a danger in every Bill that everybody tries to make it so watertight that it builds up a great body of extra bureaucracy. More and more is put into it. Everyone has to make sure that every single possible avenue of doubt will be removed in one way or another. In the end it becomes too bureaucratic. I hope that the Minister of State will realise that if there is too much bureaucracy in this field, those who will be hit will be the smallest charities, many of which are very well run. They will be subjected to bureaucracy which will add to their costs in such a way that they cannot meet them. The larger charities may be able to meet them but the smaller charities will not. It will be a great tragedy if that happens. Those are two points which I hope will stay in the background of our discussion at the very important Committee stage.
I greatly welcome this Bill. It is something that I have wanted for a long time. I know from all my experience, both as Home Secretary and then as someone concerned with charities and with fundraising, that a Bill of this kind will be enormously important to charities in the future. I hope it will be seen after the Committee stage that the Bill is such that it will do the job that we all want to see done.
§ Lord Richard
My Lords, before the noble Viscount sits down, perhaps the House will permit me to answer a point that he made to me. I did not pluck the figure of £300,000 out of the air. In fact it is mentioned in the Memorandum to the Bill under "Financial effects of the Bill". The government estimate of the revenue from Clause 49 to be paid into the Consolidated Fund will yield £300,000 a year. It is therefore in the Bill.
§ Viscount Whitelaw
I do not think I shall pursue the point. I want to leave that opportunity to other people. I am not sure that I understand it and that is the best reason for not answering the point now. I do not know.
§ 4.17 p.m.
§ Lord Houghton of Sowerby
My Lords, this is a good Bill. When we understand it better, it may turn out to be a very good Bill. I was interested to hear the noble and learned Lord, Lord Browne-Wilkinson, in his maiden speech give the House a little homily on the problems of legislation by reference. It is a common practice and well established in precedent. But it makes it very difficult indeed to follow a Bill—and this is a case in point—without saturating oneself in the existing law and comparing the two. I hope that the noble Earl will wear modestly the congratulations that he is receiving—I am sure they are well merited—for bringing this Bill before your Lordships' House. It has been on its way a long time. It was probably on the desk of the noble Viscount, Lord Whitelaw, for longer than he realises. The in-trays in the Home Office are very deep, and some Home Secretaries are not there long enough to discover what is in them. This may be a case in point.
The Bill owes its form and I believe its origin to a group of Back-Benchers in both Houses—I and a number of noble Lords served in that group—who sought to find the basis for an agreed Bill on charity reform. That is a very valuable process in our parliamentary system which is ill-used or not used at all. Yet the benefit of it could he to speed up legislation on matters which have no party political content but which nevertheless may be acutely controversial. Charily is a case in point. We spent a long time going over the ground. We were at work during the period of office of three successive Home Secretaries. We saw two of them. The noble Lord, Lord Waddington, was spared our attentions only because the matter was further advanced by the time he came. The all-party group was served by the National Council for Voluntary Organisations which enabled us to publish our findings before the Home Office had produced theirs. That was a splendid innovation in parliamentary affairs. But why do we have to rely on a voluntary organisation to serve a group of Members of all parties of both Houses which is engaged in trying to find tie foundations for legislative changes? We are backward in these matters.
The advantages of that method of preparing the ground for legislation were fully illustrated at the time of the Animals (Scientific Procedures) Act 1986. The reason some Bills take so long to come before your Lordships' House, and that reform is so difficult to obtain, is because governments are afraid of the commotion which such changes may cause and the disturbance to the unity of Parliament that they may create. That is not so if that preparatory work is done.
The first decision to be made on the Bill is to keep out the contentious question of changes in the definition of a charity and discussion on the deep difficulties and traditions when sorting the wheat from the chaff. I believe that we were wise to take a decision at the outset to keep the definition of charity and other such controversial matters out of the Bill. Successive Home Secretaries have agreed with the decision although they played with it in one of the papers that they published.
It is a regulatory Bill. It does not invite 842 consideration of the moral, social or philosophical aspects of the voluntary sector. We are dealing with an industry which claims opportunities for greater expansion and makes sterner claims upon the resources of the nation. We are here to regulate that. It is for governments to decide as a matter of policy what the range and form of charitable activities shall be. We are dealing with the machinery, the security and the regulation of the conduct of those in this field of operation.
Such regulation has been achieved before. Friendly societies, trade unions, co-operative societies and companies all need regulation. When they become larger and wider in their activities the opportunities for fraud and mishandling of funds become greater.
In my acknowledgments, I wish to refer to what I believe is the one reason for the progress that we have made; namely, the persistence of the noble Lord, Lord Allen of Abbeydale. He has raised debates on charities and has been most persistent in his desire for the Bill. As a former Permanent Secretary to the Home Office, he knew from where the initiative on charities should come. He helped to provide some of that himself. His harassment of the Government was conducted in a manner in keeping with the highest traditions of a senior civil servant. It was never unpleasant, but it was effective. There is no doubt that the name of the noble Lord, Lord Allen of Abbeydale, ought to be published in a separate schedule to the Bill.
We all agree that the Bill is overdue and that it should pass into law in this Parliament. We should combine to facilitate that. Let us therefore keep clear of issues which may not be resolved in our time but which some people may consider important and on which reform should take place. Let us not hear a single word about religious cults or anything of an allied nature. Let us leave those subjects alone and get on with the real business relating to charities: to stop the exploitation, if we can; to stop the leaks of finance; and generally to get charities more properly organised.
There are three growth industries in Britain: crime, charity and borrowing money. We wish to regulate one of those. I should like to see a firm principle in the Bill—I am not sure that it is in the Bill—that any appeal to the public for funds for a charity should bear the approval of the charity commissioners; and that everyone appealing to the public for money should satisfy certain conditions laid down by the charity commissioners regarding a lawful appeal. I leave aside local authorities and a few exemptions provided for. Such regulation is not bureaucracy; it is to stop what happens every year. It happened in my own former constituency. I read in the paper recently of a charity which someone set up in a hillside farm on the Yorkshire moors and obtained £250,000 before anyone discovered that it was a fraud. That man is in prison. Others are doing the same. They make an appeal and receive charitable gifts and so on from local sources before they are discovered. It is not unreasonable to ensure that conditions are satisfied. It is especially necessary to make provisions in the Bill regarding accountability, accounting and other safeguards.
843 I underline what the noble Viscount said. If the Charity Commission is not given the resources to get the job done, it will be as ineffective as it has been until now. Who has neglected the Charity Commission all these years? Who has regarded the chief charity commissioner's job as suitable for an undistinguished civil servant reaching retirement age? Government after government have considered that so. It is only now that we have a chairman of the Charity Commission who shows signs of having all the qualities required for this enlarged job. How does the scrutiny take place when one considers the number of charities that may seek the cover of the law?
Although it is not for us to deal with it in this House, another important consideration, especially when one considers some of the principles of the voluntary sector, relates to tax concessions and exemptions. Concessions of differing kinds are a foundation to all approved charitable objects in this country. It is as though the generosity of the great British public could not be fully expressed unless at the same time they were induced by lowering the tax burden and saying, "It won't cost you as much. You will be able to give to the charity. The Inland Revenue will pay the balance". That is what occurs at present. Now there is a campaign for lowering the qualifying limit of a gift to charity from £600 to £100. There are more and more concessions to the charitable gifts systems under the pay-as-you-earn machinery. Is it desirable for the state to enlarge the voluntary sector by increasing all the time the inducement to give?
I have just two or three matters of particular importance to me. I am still not satisfied about advertising standards. We have had some difficulty in the past year concerning advertisements by charities. The Advertising Standards Authority has been attending to that. Something is necessary in charitable appeals to bring them more within the intelligent understanding of those who receive them rather than to stir up their emotions and prejudices and so get the money on impulse that way.
Secondly, I am still anxious about media broadcasting for public support. That is still very big business indeed. There is a lot about about the television appeals for charitable support that is open to question. I raised the matter on the Broadcasting Bill on 9th July 1990. I asked whether the broadcasting authorities would be required to follow any conditions laid down by the Charity Commissioners for the conduct of broadcasting appeals for charity. I was told that the Independent Broadcasting Authority would draw up a code on this matter. I do not know whether it has yet done so. Then the Minister said—and it is all in Hansard —that the commission would do its best to see that it was complied with. But can we not strengthen the hand of the Charity Commissioners in this regard? I think we should do so.
I come to my final point: private trusts. It astonishes me that there is no body to investigate what happens to legacies that are left to charities. It appears that the charities themselves must look out for named charities in testators' wills. Whether they have agents 844 that work in the probate office to find references to particular charities I do not know; but apparently there is no body to tell them unless the executors do it, and in the case of named charities I should imagine they invariably do.
However, some bequests are to charity in general, and are so broad in description that they are not identifiable to any particular charity. What about them? Apparently the Charity Commission has no power to ensure that money left either by residue or in specific bequests to charity generally reaches charity in some form or another. That is a weakness in the law in that regard. It leaves executors much too much power to delay the winding up of the estate in order to have the benefit of the use of the residual money in the estate before finally giving their grant to charity. These may be matters that we can deal with at Committee stage.
I certainly welcome the Bill. It is long overdue, and I am bound to say that a great deal of preparation on the Back Benches of your Lordships' House and in the other place has gone into this Bill. It has been a co-operative effort, and we have a Bill as near to agreement as we can get on the matters covered, and much better than if it were left to the Government without our help to bring it forward.
§ 4.34 p.m.
Viscount St. Davids
My Lords, the privilege of addressing your Lordships today is only equalled by your Lordships' assent to my being permitted to speak on the matter of the Bill now before your Lordships' House. Charity is indeed a weighty matter; to love our neighbour being a requirement second only to a love of God. The importance of charity lies deep within our European Christian culture, and although the process of recent history has changed the nature of our national life so as to encompass other faiths, they too place a great obligation on charity.
In the language of the King James' translation of the New Testament, which has had such a shaping influence on our British culture, St. Paul's evocation to charity is so strong that it is almost a visual image. The equation of charity with love for humankind in all its manifestations will, I hope, govern our debate. If charity has, as yet, defied definition in law, it may well be that its subject is too great to contain in a few phrases. The succinct statement of the noble Earl, Lord Ferrers, that, "but once one starts to define the meaning of charity one changes the law on charity" should perhaps stand as a postscript to the preamble to the Act of 1601 and Lord Macnaghten's subsequent clarification. Lack of an absolute definition may well serve a better purpose than to create the unworkable.
The White Paper and your Lordships' debate dwell long on the issue of charities and their public morality. I find in this morality two areas of public concern which, if this Bill is to advance and bring up to date charity law, it must achieve. First, despite the lack of definition, proposed charitable enterprises should not be given the status of charities unless their purpose conforms to a moral standard acceptable to the great majority of the people. I find that a concept of "public benefit" is subordinate to the maintenance of public 845 morality. If, as I believe, this is indeed true, then the law would have no problem in rejecting an offensive religious cult and at the same time would give charitable status to contemplative religious orders. If indeed law could be drafted in such a manner, then morality might once again be regarded in absolute terms rather than in relative values.
I wish to stress that charity is deeply engrained in our culture, and even if we are moving into what some would call the post-Christian era, this in no way changes the concept of the value and the virtue of charity in our national life as recognised by the people of our land. They know what is right and they know what is wrong, and I am sure would judge the suitability of charitable status as a moral issue before seeking the level of public benefit that is to be achieved.
The second area of public concern, and one that takes up a major part of this Bill, is the rectitude with which charities will conduct their affairs. Your Lordships must ensure that there is not a single lacuna in the law when it leaves your hands. I must express my own concern at the frequent reference to the cost of maintaining the Charity Commission and the cost to the Exchequer of tax remission on charitable enterprise. Quite frankly I think that this is a little dismissive of the many millions of people who give of their time in the service of others. If the state had to replicate only that part of charity work that is essential to our everyday life, the cost would far exceed the budget for that of almost any other state activity. Tax relief I o the donor is another complete red herring. As individuals we are far more capable of identifying a proper use of financial resources than any state agency that comes to mind.
For many years I have had a particular interest in the work of the Scout Association and its sister organisation the Girl Guides Association; charities that involve some 1,400,000 young people and their adult supporters. If local authorities had to replace the work carried out by the two associations with statutory youth workers, the cost to the nation could well be in the order of £300 million per year.
I pray that your Lordships will not hold me in breach of the Standing Orders of your Lordships' House as regards speaking on behalf of outside interests if I use my knowledge of the workings of the two mentioned organisations in order to illustrate particular problems which clauses in the Bill may bring about. In order to be able to include the girl guides more fully in my observations, I consulted the legal adviser to that organisation.
Clause 49 may well gain a deserved notoriety. Under the 1960 Act and the amendments contained in the Bill, the two mentioned organisations register about 10,000 local groups and will be required to provide 10,000 sets of annual accounts. The White Paper suggests fees in the order of £5; that is, £50,000 per year raised by young people to be paid to a government agency. I hope that I need make no clearer point.
While not wishing to provoke an even worse situation, I should point out that under the provisions of the Bill the scouts and guides also have 40,000 846 groups which at present do not have to register and, therefore, there will be 40,000 sets of annual accounts of which the commissioners will know nothing.
The Royal Charter under which scouts and girl guides are constituted provides for each of the organisations to maintain their own rule books which I understand augment statute law. Clause 22 provides for an independent examiner of a group's accounts who is deemed to have practical experience of the practice of accountancy. Unless the procedures contained in the rule books are allowed to stand, that will produce a major problem not only for the 10,000 groups which register but also for the 40,000 which do not.
Over the years the scout and guide associations and similar youth organisations have evolved a system of what I call a "holding trustee" to secure the proper ownership of property owned by local groups. Clause 33 may well remove a power from the central organisation which, because of its superior experience, is better placed to take longer term decisions.
Clause 43 deals with disqualification for acting as a charity trustee. All youth organisations, by virtue not only of their care of charity funds but also their charge of young people, take immense care to refuse the offered services of adults with known convictions for all criminal activities. For example, in one's local scout group the members of the executive committee are the trustees. In the case of a guide group it is the guider who is the trustee. Should any of those people be convicted of the named offences, they must cease to be trustees. I have not calculated the number of trustees involved but I should guess that it goes into tens of thousands. Does the Bill go far enough as regards the relevant offences? The Bill quite rightly addresses that old problem but I believe that the exclusions need to be further thought out and offences added other than those for dishonesty.
In all aspects of charity work a very high standard of moral perception is required. We should fail in our duty to the public if we did not take that clause a few steps further. The computer age has given to the charity commissioners a tool with which they can render to charities an aid hitherto denied to them. The cost of providing that aid would be insignificant compared with the advantages gained. Before sitting down, I make a plea to the Government, through the good offices of your Lordships' House. If all involved in charitable work—and there can be none in this House who are not—are to carry out their responsibilities, access is needed to all the information held by the agencies of state as regards those who have been convicted of crime. There is no requirement for an individual to offer his services to a charity but should he do so, the knowledge of any past convictions must be made available to the charities concerned. How can those who have the care of charity moneys and young people and the multitude of charities within the charity world carry out their stewardship if they do not have access to that information free of charge?
I remind your Lordships that the Bill follows other recent Acts—the health and safety Act 1974, the Environmental Protection Act 1990, the Food Safety 847 Act 1990 and the Children Act 1989. All those Acts are applicable to the work of national youth organisations. I hope that the various exceptions available in the Charities Act 1960 and mentioned in the Bill will be readily accorded to us, otherwise what time shall we have for charity? I thank your Lordships for your indulgence.
§ 4.45 p.m.
§ Lord Allen of Abbeydale
My Lords, it is my great privilege on behalf of the whole House to thank the noble Viscount for what was an admirable and extremely audible maiden speech. It is one of the great strengths of this House that we benefit from contributions from people who are expert and knowledgeable on various aspects of our national life. What we have been told today, in particular about the problems which the Bill presents to the scouts and guides, and the way in which that has been put, demonstrates that the noble Viscount speaks as a real expert on a subject which crosses party lines. He has made a number of valuable points which will require considerable thought. We are most fortunate as a House to have had two notable maiden speeches in today's debate. I hope that we shall hear often from the noble Viscount in the future.
I should like to add my welcome to that which the Bill is generally receiving in the House. It has taken a long time and it is surprisingly long. However, in essentials it carries out the main recommendations of the White Paper which received general approbation. I am sure that the general thrust of the Bill is acceptable in all parts of the House. For my part I hope that we can press on so that it passes through both Houses before the election.
Looking back at our various debates—and I must plead guilty to initiating quite a number—I see with some interest how the Government's position has gradually changed from one of marked reluctance to contemplate any legislation whatever (this goes back to the days before the noble Earl joined the Home Office) to their introduction of the substantial Bill now before us. However, I shall not tease the Minister about past history. I prefer to examine where we go from here.
The noble Lord, Lord Houghton, spoke in rather deprecatory terms about the chairman of the Charity Commission before the present incumbent. I submit that that is rather unfair. The previous occupant was appointed to the post following an open competition and anyone who knew him would hardly subscribe to the view that he was a rather dull and undistinguished civil servant.
It is unusual to approve of decisions to leave out possible candidates for inclusion in a Bill. However, I go along with those who have said that it is right not to attempt a definition of charity; nor do I think it right to attempt a definition of political activities.
As to what is in the Bill, I note that it copies the welcome provision in the recent Scottish Act dealing with dormant accounts; that is, accounts which, rather like the Cheshire cat, have faded away leaving only their money behind. As an aside, it is rather a pity 848 that, in gratitude, the Bill does not in exchange enable the Scots as well as the commissioners to go to Customs and the Serious Fraud Office when, as I read their legislation, the curtain of secrecy is lifted for them only in respect of the Inland Revenue.
I fear that although the number of charities is growing, as we have been told, charitable giving has not kept up as well as it should. There are various reasons. I am sure that one excuse people make for not giving is that charities are extravagant, inefficient and on occasion corrupt. The Bill should do a great deal to correct any such impressions. People will know that they are on safer ground in believing that their money will be honestly and efficiently used for the purpose for which they contributed. Also, should anything be wrong, there is a good chance of its being spotted and dealt with. All that is to the good.
There are some points in the Bill to which I should like to refer at this stage, although the Minister need not feel under an obligation to answer them all today. I am sorry that as I continue it may sound more like a shopping list than a statement of high principle. As the noble Lord, Lord Richard, explained, they are points of great practical importance to those concerned in the charity field.
One problem I experience in understanding the Bill is that so much is left to regulation. I hope that we can be assured that there will be widespread consultation before the contents of the regulations are finally settled.
Like the noble Lord, Lord Richard, I must refer to Clause 2. There were moments when I thought I understood what it said but then the meaning slipped away. I read it as dealing primarily with quasi-religious sects—I hope the noble Lord, Lord Houghton, will forgive me for mentioning them. We were given a fascinating explanation by the noble and learned Lord, Lord Browne-Wilkinson, in his most impressive maiden speech. Perhaps at some stage the Minister will explain what was intended and how much the clause was intended to cover. I am not sure that the clause will win a prize in any "Renton competition" for clarity of drafting.
I turn to the submissions to be made to the charity commissioners by the 170,000 registered charities. Two preliminary points arise. First, we hear a great deal about the figure of 170,000. However, can any estimate yet be given as to how many of those charities will be found to have gone out of existence as disclosed by the exercise on the register which the commissioners are now conducting? Secondly, in addition to the registered charities, it is not to be forgotten—although it frequently is—that there are exempt and excepted charities. No one knows quite how many there are—perhaps 100,000. Here and there the Bill touches some of those and we shall have to consider more deeply whether it should do so.
My main question concerns what is to happen to the thousands of accounts and reports which will pour in—requirements which, as I read the Bill, even small charities must face in some form. The explanatory note says that a substantial sum is to be spent on a computer to process the information as the first stage in the monitoring process. But we are not told much 849 about the second and later stages of the process. The explanatory note does not contemplate any long term addition to the staff. It has to be borne in mind that the commissioners are to take on some new duties under Part III of the Bill. We should all like to know more about the likely effectiveness of the monitoring processes on which that somewhat meagre staff will be engaged. It would be helpful also to know what happens when they spot something which has gone wrong. What has happened to the proposal in the White Paper that there should be some kind of black mark on the register and that that black mark should somehow be publicised?
Like previous speakers I am bound to say a word regarding Clause 49, which deals with charges. The clause includes the slightly surprising provision that charities may have to pay the commissioners for receiving their accounts. We do not know in any detail what is contemplated by way of fees. It must clearly be different from suggestions in the White Paper. There the income is estimated at £750,000. The explanatory note estimates it at £300,000. It is not clear whether even that modest sum is net of the costs of collection.
One point that emerges from the explanatory note is that the trustees may be charged for the explanatory leaflet explaining what is in the Bill. As it is likely that the trustees who most need guidance are those who are least likely to pay I am not sure that that is particularly helpful. Indeed, one is bound to wonder about some of the duties which will fall on the rather unsophisticated trustees of the smaller charities. For example, how will they set about recovering tax from the Inland Revenue now that the official custodian will no longer do it for them?
I turn briefly to Part II. The noble Lord, Lord Richard, has already made the main points. I am particularly worried about the definition of the "professional fund-raiser", which seems calculated to bite on the voluntary workers who are difficult enough to recruit in all conscience. It also strikes me as rather odd that we find in Clause 56 a definition of "charitable purposes" which is different to the "charitable purposes" dealt with in Part I. That presumably rests on the definition in the 1960 Act. There is also a difference in the "charitable purposes" defined in one of the clauses in Part III.
I am concerned about the definition of "public place" in Clause 63. This is rather more than simply a Committee point. My wife takes an active part in the local Abbeyfield Society. When she organises a coffee morning and places a notice in the village post office about it, it looks as though my house then becomes a public place for the occasion as the public will have access to it. It would also follow that we should need to go through the elaborate process of obtaining a local authority permit—a prospect which appeals neither to me nor to the local authority concerned. I hope that I am wrong. If I am not, I cannot think that that what the Government really intend. I hope too that somehow it will be possible to avoid clashes between national flag days organised by the commissioners under their new powers in Clause 70, 850 and flag days authorised by the local authorities in their areas. Without consultation awkward situations may arise.
As has been said, the powers to deal with trustees convicted of criminal offences are to be welcomed. I am not sure whether the provision applies to exempt and excepted charities. I believe that it does and if so there may be something to be said for spelling that out in the Bill. Nor is it clear to me how the commissioners are to find out about the convictions. As the noble Viscount pointed out, many people are involved. Are the commissioners to be added to the list of bodies entitled to obtain information from the Criminal Record Office?
On a different point, the White Paper contemplated that the commissioners would be able to appoint agents such as councils for voluntary service to undertake local reviews. I can find nothing about that matter in the Bill, and I wonder why.
My final comment is about Europe. I asked a Question the other day about what will happen to the provisions in the Trustee Investment Act 1961 when we have a market without frontiers. As the provisions stand they will preclude trustees from investing in other member states of the Community. I was told that the 1961 Act was under review; we have been told that since 1961. It is a little disappointing that the Bill passes over the point in silence.
For the rest, I gather that the arguments about VAT zero rating and the proposals for new Community legislation have been satisfactorily resolved—at any rate, for the time being. However, when the chairman of the Charity Commission is reported as saying that in this context some things may not be critical including, for example, the very word "charity", it is difficult to avoid wondering whether we can count on this Bill, once it has passed into law, to hold the field for anything like the length of time for which the 1960 Act has prevailed. Even so, I greatly welcome the Bill and hope that we can get on with it with all speed.
§ 5.2 p.m.
§ Lord Clitheroe
My Lords, we have listened today with great interest to many wise speeches, not least to those of the two maiden speakers. Perhaps I may digress a little and go from the sublime to the ridiculous in giving your Lordships a case history of some small charities that still exist. I shall take only a few minutes.
In my parish there are four charities with which I am concerned as senior trustee and correspondent with the Charity Commission. The first charity is the Unknown Donor. It has an income of £1.50 per annum comprised of a rent charge on a farm which was amalgamated more than 100 years ago. It was to be applied in the purchase of blue cloth for the poor of the parish. At the turn of the century the blue cloth became unobtainable. My grandfather adjusted the requirement to three lengths of red flannel. During the last war I found a note from my father which recorded that due to clothes rationing it was no longer possible to provide red flannel. The subject was discussed in 851 depth at a parish meeting and subsequently the income was distributed as cash together with the income of the second charity.
The second charity—that is the Poor's Land—holds some Treasury Stock which on 11th March 1991 had an approximate value of £58.03 and an annual income of £6. It is locally known as the St. Thomas's Dole. Thus the two charities combined have an income of —7.50 per annum. Several years ago my father topped that up to £15 out of his own pocket. It is duly distributed on St. Thomas's Day by me, as chairman of the parish meeting, with the appropriate advice of the meeting, to three people resident in the parish deemed to be most in need. I wish to point out that the question of tax is irrelevant as is the question of winding them up. The distribution of the money is similar to that of the Maundy money: it is a routine that has been carried out for hundreds of years.
The third charity is a memorial fund of some £700 concerned with the upkeep of a grave to the sum of £5 per annum. The remainder, some £70, is for the benefit of schoolchildren in the parish and is normally spent as the donor requested on a annual trip for children to Blackpool or some such frivolity.
The fourth charity concerns the Church of England school built by my great, great grandfather in 1835. After the closure of the school by the education authorities in 1985, and much against local wishes, the trustees had to find an alternative use for the building. I financed the setting up of a playgroup which I am glad to say is proving to be most popular and successful. It educates three to five-year olds. The cash flow covers the operating costs for the most part. The old trustees' funds of some £1,000 provide income which is being accumulated to deal with the maintenance of the building.
In the desire to tidy up the messy structure of these charities, and believing that the 1985 Act made that possible, in 1988 I approached the Charity Commission to assess the flexibility for doing so and to see whether it was possible to amalgamate them or some of them. After six months the commission replied that it did not have the power to agree to that in view of the different nature of the charities. Furthermore, it expressed doubts that a play group at the school fell within the existing objectives of a trust for the poor people of the parish. The difference now is that the children involved are between the ages of three and five and not five and 12. The people are that much poorer because they must pay rather than the school being financed by the local authority. Nevertheless, that matter was an issue and remains so.
In the 1990 census of charities a miasma of correspondence evolved including three and four-page letters, requests for accounts and the provision of a series of pamphlets which appeared totally inappropriate to our situation. I did not blame the authors of those letters, although the contents were not helpful and reminded me of the difficulties that I and perhaps other noble Lords have had in communicating with the Kennel Club. I do not blame the authors; I blame the system.
852 Surely the business of small charities within small parishes should be handled locally and not be centralised into a grand computer and mixed with mega charities or even medium-sized charities. Surely no one in his right mind would require accounts for charities of the type to which I am referring to be submitted to any central organisation in London. Surely the cost of correspondence—even one letter—is greater than the income of many of the charities. That is particularly so if it is necessary to employ professional people to interpret or communicate with the Charity Commission, and for me it often is because I am not very clever.
On the other hand, there certainly is a need for the supervision of all charities. However, in the case of such small charities that should be exercised by the local parish council or parish meeting. Indeed, could not those same bodies be asked to take over the responsibilities of interpreting the objectives of the original donors and of advising and consulting with the trustees on the merits of amalgamation? I believe that should be done rather than the charities being written off or subject to other routes suggested in the Bill. If problems cannot be solved in a local forum by all means make provision for the Charity Commission to act as a further adviser or a court of appeal. The present situation of the Charity Commission reminds me of the well-known principle expounded in Parkinson's Law: the board of directors will always spend more time discussing the bicycle shed than attending to proper business. As your Lordships have pointed out very clearly this afternoon, there is proper business to attend to relating to trustees with huge sums of money, some of it perhaps being handled in dubious ways. But until the Charity Commission's bicycle sheds have been demolished, this serious business will never receive proper attention.
I beg my noble friend to ensure that the new Bill is amended to deal with this problem. Many of the schedules have been referred to this afternoon—Schedules 41, 42 and 49—and they are all relevant. However, they will probably not resolve my troubles or save the Charity Commission a great deal of the money which could be saved if my suggestion were acceptable. From reading the Bill as it stands, the problem has not been sensibly resolved.
§ 5.11 p.m.
§ Lord Brightman
My Lords, I hope that your Lordships will give a warm welcome to the Bill. I shall begin by giving one reason why it is so necessary to buttress the powers of the charity commissioners.
There is an important distinction between a charitable trust for the public benefit and a private trust for individual benefit. In the case of a private trust, there will always be specific beneficiaries to whom the trustees are accountable and who are likely to take action if the trustees fall down on the job. In the case of a charitable trust, by contrast, the trustees are operating largely on their own, without any beneficiaries to prod them. In consequence, if there is incompetence or fraud, it may well go undetected and unchecked. We can only look to the charity 853 commissioners to protect the public interest. Therefore, the charity commissioners must be given all the powers that they need in order to fulfil their role.
The two topics on which I should like to say a few words are dormant funds and amalgamation. As to dormant funds, I particularly welcome Clause 19 of the Bill, which taps dormant funds and puts them back into circulation. Charities become dormant for a variety of reasons. Trustees may have died without appointing successors. In the case of persons who are trustees ex officio, the new holders of the relevant office may not have been informed of their duties by their predecessors. There may be a dearth of properly qualified beneficiaries. For example, the beneficiaries may be poor people in a small parish. The parish may have become prosperous, so that no poor people are left.
Your Lordships may be interested to know the dimensions of this problem. Between 1978 and 1980 Humberside undertook a review of dormant charities within the county. It found 120 inactive charities. Those charities had a total of £104,700 lying idle in the bank. Humberside has a population of 800,000 people. If the proportion of dormant funds to population is the same throughout England, Scotland and Wales, there could be dormant funds of £7 million being Put to no use. Therefore, Clause 19 of the Bill should prove a useful innovation.
My second topic is the amalgamation of small charities. I can give your Lordships a few figures to demonstrate the nature of the problem. In 1978 Oxfordshire County Council commissioned a report on charities for the poor in the rural parishes of Oxfordshire. Two hundred and eighty-eight charities for the poor were identified; 89 of those charities had an annual income of less than £10 per charity; 148—that is more than half—had an annual income of less than £25. Such tiny charities can do little good. They are a burden to the trustees and little help to anyone else. But if all those charities with an income of £200 or less were put together, they would command an annual income of just under £9,000, which could do much good.
Section 3 of the Charities Act 1985 was introduced expressly to deal with this problem. Under the pre-existing law, a small charity would have needed to apply 10 the charity commissioners for a formal order to enable it to amalgamate with another charity having similar objects. That was expensive. Legal help would be needed and a tiny charity could not have contemplated the cost. Section 3 of the 1985 Act established a do-it-yourself scheme under which an amalgamation could be effected by a simple resolution of the. trustees, without the fuss and bother of obtaining a formal order. Section 3 was intended as a pilot scheme, to see whether it would work. The scheme, which was limited to charities with a very small income—£200 or less—has worked. Some 1,000 amalgamations have taken place. Clause 41 of the Bill builds on Section 3 of the 1985 Act and applies it to charities with an annual income of £5,000 or less. I welcome Clause 41.
Might it not be desirable to introduce some element of compulsion into Clause 41 when a charity is 854 Minuscule—with an income of £10 or less—and another charity with similar objects is willing to receive that minuscule charity? Might it not be wise to give the commissioners a power to direct an amalgamation in such a case?
I wish to make one final point on Clause 41. If I heard my noble friend the Minister correctly, he told your Lordships that a permanently endowed charity would not come within Clause 41. A "permanently endowed charity" is defined by Section 45(3) of the 1960 Act as a charity which can spend only its income and is not authorised to spend its capital. I was of the view that Section 3 of the 1985 Act applied to a charity with a permanent endowment. Is it correct that Clause 41 is intended to exclude a "permanently endowed charity"? Would that apply, for example, to a charity holding with (shall we say?) an income of £50 a year derived from an investment worth £1,000 to which it cannot resort for its charitable purposes?
I was delighted to hear my noble and learned friend Lord Browne-Wilkinson advocate setting out the 1960 Act in an amended form in a Keeling schedule. That device was recently used in the Family Law Reform Act 1987 and in the Government Trading Act 1990. If it is done in that way, the reader will have the whole picture in front of him instead of trying to read a patchwork of cross-references. Will the noble Earl consider whether a Keeling schedule might not be of immense benefit to the public?
I have one further question. I am worried about Mr. Brown. Of course, that is not the gentleman's real name. However, Mr. Brown was the hero—if that is the right expression—of the horror story which I narrated to your Lordships in the debate on the White Paper on 30th November 1989 (at col. 562 of Hansard). Mr. Brown was a retired businessman who lived on public assistance. He registered a charity in 1968 for the relief of children of the third world. In the course of three years he collected £10,000 ostensibly for his charity, until the charity commissioners caught up with him. Not a single penny was ever applied by him for any charitable purpose. Most of the money went on expenses and administration. He raised his money partly by the use of collecting boxes. He bought 1,000 of these boxes and distributed them among public houses, hotels and restaurants. However, he abandoned 234 of them because they were too much trouble to collect. So 234 boxes remained on site as a continuing invitation to the public to donate money to a charity which would never receive anything.
What would be the position under the Bill of a future Mr. Brown? As I understand the Bill, collecting boxes left by the promoter of a charity in hotels, shops, restaurants, public houses and garage forecourts will not need a permit under Clause 64 of the Bill; nor will they need a licence under the House to House Collections Act 1939 because that legislation is to be repealed. I should be most grateful if the noble Earl can tell your Lordships whether future Mr. Browns will be able to distribute collecting boxes without any licence or permit. My question is confined to that one point of collecting boxes.
855 The Charity commissioners were set up in 1853 by the Charitable Trusts Act of that year,for the better administration of Charitable Trusts".That is still their role. I have looked at this old Act. It does not seem to me that the commissioners' powers have changed very much over the past 138 years. In my respectful view, it is high time that the commissioners were given a new set of teeth. I believe that that is what this Bill will do. I hope that the commissioners will be given the financial resources which they will need in order to fulfil their enhanced role and which they will need if they are to continue to attract persons of high quality to service this important office.
§ 5.25 p.m.
§ Lord Swinfen
My Lords, I should first declare an interest in the Bill. I work for a charity and, as my salary is 99 per cent. of my income, I have a very definite interest in these matters. The noble and learned Lord, Lord Browne-Wilkinson, suggested that, once the Bill becomes enacted, the amended version of the Charities Act 1960 should form part of the legislation as a Keeling schedule. I welcome the suggestion. Moreover, I know that those who administer charities would do likewise.
Sometimes it is very expensive to obtain professional advice. Most charities, quite rightly, try to keep their costs as low as possible. The above suggestion would certainly help them. I hope that my noble friend on the Front Bench will give the suggestion serious consideration. I also hope that the Government will give it consideration not only in this Bill but also in relation to many other Bills. Not being legally qualified, it would be much easier for me—and, I suspect, for other unqualified Members of this House—if Keeling schedules were induded in far more Bills.
The noble Lord, Lord Houghton of Sowerby, will be interested to know that there is an organisation which spends the whole of its time reading wills as soon as probate is granted and that charities can, for a reasonable fee, obtain advice not only on bequests directed to them particularly but also on general bequests which are of interest to them. The organisation has been in existence for many years.
The charities with which I have been in touch generally support the Bill. There is a general welcome for the improved regulation of charities. They welcome the attempts in the Bill to do away with improper fund-raising. I know of several instances of the latter, but I shall not weary your Lordships with them this evening. There are unscrupulous operators who misuse the name of genuine and well-respected charities, as well as inventing fictitious charities, to raise money for themselves with little or no funds being passed to the charity.
However, the Bill which is designed to put a protective arm around charities in this sphere is, I am afraid, in danger of throttling them. I suspect that the people who drafted the Bill have no experience of fund-raising. It is unfortunately a case of good intentions going awry. I am sure that we can put that 856 right in Committee or at a later stage of the Bill. If my noble friend is interested, I and representatives of charities other than the one for which I work would be pleased to discuss the details with him and his advisers.
Clause 56 defines a professional "fund-raiser". As that now stands I fear that it may well catch the volunteer fund-raisers who are paid their expenses plus a small fee—in most cases a token fee only. Clause 58 is welcome in that it requires professional fund-raisers and commercial participators to state for whom they are raising funds. However, charities with which I have been in touch see difficulty with the further requirement for a statement of the method by which the fund-raiser's remuneration in connection with the appeal is to be determined. It is not clear at this stage what information will fulfil that requirement. It could well discourage a response to direct mail advertising.
This morning, as a member of the Direct Mail Services Standards Board, I had the opportunity to discuss that matter with representatives of a number of direct mail organisations. It would appear that with the Bill, as now drafted, and with the direct mail houses being commercial participators responsible for providing such information, many would be unwilling to undertake mailing for charities. Direct mail is a fund-raising tool used by many charities today. It is not just a fund-raising tool for that mailing shot; it is a tool designed to obtain the names and addresses of those who the charity believes will give to it regularly and to whom the charity itself can write later. If that method of fund-raising is cut from under them, many charities may well have considerable difficulty in raising the funds that they require.
As has been mentioned, under Clause 63 the definition of a public place is extended to cover any place to which members of the public are permitted to have access whether the place is public or private property. I suspect that many of our spouses have run coffee mornings. It is not uncommon for there to be a small entrance fee and for the coffee morning to be open to anyone, whether or not known to the owner of the house. That immediately makes it a public place and a licence will be required.
In that respect, I understand that requests for a licence must be made at least one month and preferably not more than three months in advance. When there is a disaster, such as the typhoon in Bangladesh, the public generally wishes to respond immediately. We do not generally have a month's notice of a disaster. If we did, we could make arrangements to ameliorate the effects. I already have a licence for a fund-raising collection to take place next September in a town adjacent to a race course because of a charitable event on that race course. It would be highly undesirable to raise money on the race course and to find that another charity was raising funds immediately outside the gate. Those generous individuals who are prepared to give their funds to the charity for which I work, and not put it on the horses, would have been caught on the way and 857 that would reduce the fund-raising potential of the event which I am helping to run. Both ends of the scale are wrong: one is too short and the other is too long.
The Bill's preamble suggests that it will have no cost implications for local authorities. That is incorrect with regard to the cost of licences for fund-raising events, collections and so on. As I read the Bill, every fund-raising event will require a licence. Some events will require several licences—for instance, a sponsored walk that takes place over a number of local authority areas. Local authorities will be so overburdened that they will bear the cost themselves, which will put a charge on their community charge payers—I do not see many willing to do that—or, what is more likely, will start charging the charities, and that will further reduce the charities' funds.
§ 5.36 pm.
§ Lord Young of Dartington
My Lords, I join with other noble Lords who have welcomed the Bill, especially the measures to control malpractice in the raising of funds. I am sure that we are all agreed that anyone who trades on the benevolence of the public with a view to benefiting only himself or herself is villainous, and the Charity Commission should have ample Dowers to deal with such people. While joining in the general welcome, I wish to raise three points of regret.
The first, which I know goes rather wide, is about the overall purpose of the Charity Commission. It is viewed in the Bill, as it was viewed in the 1960 Act and other charity legislation which goes a long way back, as a body whose main job is to deal with the administration and regulation of charities and the prevention of abuse by people who take advantage of the tax and other benefits which have been conferred upon them. As I said, it is important to prevent abuse, but it is equally important, as the social climate has changed since the 1850s, and even since the 1960s, that charities and all that they stand for should be promoted.
Charities have become much more significant in national life. They are the inseparable handmaidens of voluntary effort. It is upon voluntary effort, already one of the best features of British society, that we all depend for much of the innovation and new growth that exists. The unfortunate recent cuts in government spending in so many spheres, especially the economies that have been forced upon local authorities, have left many voluntary bodies without proper support. They will flourish as they should only if charitable giving is much increased.
I should like to see incorporated in legislation, to set against the necessary but negative purpose of regulation, that the commission should have the equally necessary but positive purpose of encouraging, fostering and supporting charities and charitable giving. The commission would then add to and supplement what is already done by the excellent Charities Aid Foundation, the National Council for Voluntary Organisations, the Directory of Social Change and other bodies. We would then have regular reports from the commission, not just on the black 858 sheep in the fold but on the excellent work that is being done by so many of the existing charities. We would have it drawn to public notice that there were serious gaps in charitable provision which need to be filled. We would hear from the commission about the good practice of some pioneering charities which could well be followed by others, as well as having a series of model constitutions in the commission on which people could draw.
It would be best of all if the commission were firmly established as the body whose duty it was to advise the Government—not just the Home Office but the whole Government, particularly the Treasury—about the policy they should adopt towards charities. For example, if the commission were cast in this constructive, positive mode, it would at present advise the Government in favour of the national lottery, for which we have been waiting so long. The proceeds would go to charity in the same way as the fund-raising of the BBC and the independent television companies is used to benefit charity.
My second point is about the extra burden that I and many others who have already spoken in the debate fear that the Bill will impose on trustees of the many tens of thousands of smaller charities and the unpaid volunteers who are the trustees or who work for all kinds of charities of all sizes. The Spastics Society had something to say about this in the briefing paper which was circulated; so did the almshouses association.
If there is any consensus which has so far come out of what noble Lords have said, it is that on this matter the Bill has gone too far and needs to be pared down. This was part of the import of what the noble Viscount, Lord Whitelaw, said, as well as the noble Lord, Lord Allen of Abbeydale, and others. The noble Lord, Lord Clitheroe, gave some marvellous examples of small charities which, in the view of many people, should not be caught by the new supervisory powers given to the Charity Commission.
As one instance, what is the point of making it a criminal offence under Clause 28 for any trustees of any charity of any size to fail to produce accounts and reports in the form prescribed or to produce them late? Why should it be a criminal offence? The Government do not seem to have the support of the Woodfield Report or of the White Paper. The latter said that:Sanctions considered in the Woodfield Report (for accounts as for non-registration) included criminal penalties against trustees and financial penalties against charity funds. The Government believe that the Report was right to reject these".Since then it appears that the Government have changed their mind, but I for one hope that they will change it back again.
My third point goes the other way. I believe that in some respects the commission needs more bite. It has tended to be too sparing in the use of the powers it has and it also does not have enough teeth with which to bite. Clause 29 is a case in point. Where there has been malpractice, it gives the commission the same powers to bring legal proceedings as are at present exercised by the Attorney-General. However, having given the powers with the right hand, the clause takes them 859 away again with the left hand. The powers that the Attorney-General used to exercise in the bad old days before this Bill are, in the new age, only to be exercised with,the agreement of the Attorney General on each occasion".That seems to me a nonsense proposal. If the clause means that there will be a substantial difference in what is done in the future, the commission should not in this respect have to go cap in hand to the Attorney-General every time it wishes to exercise its powers.
§ 5.45 p.m.
§ Lord Stanley of Alderley
My Lords, I too welcome the principle behind the Bill. I hope it gets on to the statute book as soon as possible. However, I ask my noble friends the Minister and the Chief Whip to give your Lordships plenty of time to make sure that we get the small print correct. I am extremely doubtful that it is so at the moment. Certainly, the drafting needs much explanation. I look forward to my noble friend clarifying it. Perhaps he would like to make a start this evening by explaining Clause 2 for me and others. It exceeds even Sir Humphrey's best efforts in the programme, "Yes, Minister". I found the explanation of it by the noble Lord, Lord Richard, quite excellent. The queries he raised on it and on Parts II and III were valid. I hope that my noble friend will be able to answer them. If he cannot answer the question on Clause 2, we should suggest that Sir Humphrey be elevated to the peerage so that he can explain it.
My concern will focus on three matters: first, Part II. I fear that many—indeed all—voluntary workers will find some of their duties under this part of the Bill onerous. That is putting it mildly. It has already been mentioned by my noble friends Lord Whitelaw and Lord Swinfen.
Voluntary workers are a charity's bedrock. No lifeboat would put to sea without their dedicated work raising the necessary funds. I cannot—and I am sure that noble Lords cannot—sufficiently praise and admire their dogged persistence. However, if we want to get rid of them or frighten them off, just suggest that they fill in a form. Sir Humphrey and his lot may not understand the dread of forms and regulations, but I can assure my noble friend that it exists. We must make sure that the voluntary workers or helpers are not hindered by red tape under the Bill. If we wish, we should put the onus on the paid official, but not on the voluntary slave, if I may call him or her that.
My second point concerns exemption certificates mentioned in Clause 70. Being closely involved with a major charity, selfishly I shall want to know whether charities which already have Home Office exemptions will automatically receive exemptions from the commissioners. If the rules for exemption are to be altered, what are these new rules likely to be?
Less selfishly, and thinking of my wife, who is involved with smaller charities, I have to say that, although the major charities may be able to cope with all the new regulations, particularly if they are exempted, I am concerned about the smaller ones. 860 They are the least able to cope with more bureaucracy. That point was made by the noble Lord, Lord Young, and my noble friend Lord Whitelaw.
I accept the reasons and the need for controls, but I wonder whether it might be possible to have temporary exemptions or even local exemptions. I hope that my noble friend will consider the problem. I shall try to get someone younger and wiser to suggest a possible way around the problem at Committee stage. Certainly Part II needs careful examination.
Last but by no means least comes my and your Lordships' instinctive dislike of passing a Bill whose main effect will arise from the regulations—a point made forcefully by the noble Lord, Lord Allen. I very much hope that my noble friend will be able to give the House details of what may or may not be contained in the regulations. I know what my noble friend will say. Your Lordships will have heard 1,001 Ministers of the Crown say that it is impossible to give such details. I should be old enough by now to realise why that is so. However, I still refuse to accept the principle that it is right for Parliament to give blanket powers to future Secretaries of State.
I am sure that, given the time, your Lordships will be able to iron out these problems. It will be difficult, however, for noble Lords to decide how much time to spend on trying to get the Bill right as against possibly losing the Bill. I would prefer to sit all night to get this Bill right. I believe noble Lords, particularly my noble friend on the Front Bench, will wish to see a sensible, workable Act for charities on the statute book.
§ 5.51 p.m.
§ Lord Nathan
My Lords, it is common ground that the voluntary sector is a central pillar of our society. It has developed and grown enormously in recent years in response to the demands made upon it, particularly in the context of government policy over the past decade. In his address to the Charities Aid Foundation the other day, the Prime Minister said that charities should be seen as the cement that binds society together.
It is little wonder, then, that the National Council for Voluntary Organisations took the initiative in forming a working party on effectiveness and the voluntary sector, because efficiency and effectiveness in relation to the huge total annual income that we are discussing are essential. That sum of money has already been mentioned. I had the honour to be asked to chair that working party which reported in April 1990.
Efficiency is not solely a matter for legislation. Nevertheless the Bill is very welcome for what it seeks to achieve. Accountability, openness or, in the fashionable Eurospeak, transparency, are essential if confidence is to be retained. That must relate, first, to the collection of funds and the process of appealing; secondly, to the guardianship of money collected; and, thirdly, to the application of money for the purposes intended.
The vast increase in charitable activity and funds collected has meant that the collection of funds has expanded from holding coffee mornings to the involvement of major commercial enterprises. The 861 controls on fund-raising set out in Part II of the Bill are therefore welcome. However, they will certainly require careful consideration in Committee to ensure they do not have a wider impact than is desirable or intended. Much has been said about that already. I have several questions for the Minister. Will I have to conform to rigorous controls if I have friends to my home to appeal for funds for a local charity? Similarly, will I have to conform to rigorous controls if I telephone a business friend and ask his company to donate to a charity and ask him to secure donations from his business friends? Will I, he, or his friends and their companies, be caught up in the web of controls? If that is the case, they may be frightened off and avoid becoming involved.
As regards the emergency appeals which receive such widespread and generous public support, it will be essential to ensure that the timescale required for compliance with the controls will not hamper the appeals. In this context I refer to the concern that was expressed in the report of the working party at paragraph 4.18 in connection with appeals in the case of national disasters. It seemed to us essential that guidelines and specimen trust deeds issued by the Attorney General should be more publicly available. I understand that in September of this year the Red Cross published and distributed comprehensive guidenlines on all aspects of managing emergency appeals. That is a great step forward but it will serve no purpose if the time required to secure the requisite consents extends to a month or more. That has already been mentioned.
A further concern expressed in paragraph 4.19 of the report related to the hugely popular Telethons. There was a time not so long ago when certain of the organisations conducting Telethon appeals were not charities. They were therefore not subject to the controls which, even then, were exercised by the Charity Commission. The major organisations conducting Telethons have got together to establish a code of conduct relating to all aspects of their appeals, including the mode of appeal, the guardianship of the money collected and its distribution. All those organiations are now registered charities. That, too, is a great step forward.
I am glad to find the term "charitable purposes", as defined in Part II of the Bill, includes purposes which are benevolent or philanthropic, whether or not they are charitable as a matter of law. However, to avoid confusion, I would prefer another phrase such as "charitable or kindred purposes" or "charitable or benevolent" or some other similar phrase. I believe it is a mistake to endow the term "charitable purposes" with a meaning which is so different to that which has been imbedded in English law for so long. However, that is just a detail.
The point about extending the regulations to cover appeals for organisations other than those charitable in law is important because any impropriety or failure in accountability by any organisation appealing for funds undermines public confidence. It is therefore no less important that appeals conducted by those organisations which are not in law charitable should 862 be conducted in accordance with the same strict requirements that apply to those which are in law charitable.
I believe it is no accident that, as appeals for good causes have extended in scope and amount, those responsible for fund-raising have established the Institute of Fund Raising Managers to establish and maintain standards. That institute is making a great contribution in carrying out the purposes which lie behind Part 11 of the Bill.
There are provisions in Clause 49 which seem to me to be sensible—for example, the provision that enables the Charity Commission to charge for certain services. That matter has been referred to extensively. However, concern has been expressed, not as regards the Charity Commission having that power, but on whether the Treasury rule relating to "no hypothecation"—the noble Viscount, Lord Whitelaw, referred to that—would be applied so that the Charity Commission could not retain the amounts so charged without a reduction by an equivalent amount of the funds provided by the Treasury. Such an arrangement would be quite unacceptable. I hope the Minister will say what the position will be.
I wish to make two minor points on the new provisions relating to land contained in Clauses 33 to 36 and Schedule 1 to the Bill. On the whole I warmly welcome those provisions. First, under Schedule 1 it strikes me as odd that in the catalogue of "connected persons" the settlor (or the person who creates a charitable trust) is not included. I wonder whether that is an accidental omission.
Secondly, there is the matter of short tenancies which may be required by either large or small charities. It appears that these quite minor transactions are caught by elaborate requirements of these sections which it would be extremely expensive to fulfil and which appear to be unnecessarily complex in such cases. I would be interested to know whether, under the present arrangements, experience has indicated a large measure of abuse in this context. I should be surprised if that were the case. Clearly this is another matter which will have to be explored in Committee. These, however, are minor points relating to a useful and necessary Bill.
§ 5.59 p.m.
§ Baroness Faithfull
My Lords, I welcome the Bill and I congratulate the noble Lord, Lord Allen of Abbeydale, on pressing Her Majesty's Government for so long on the matter. The noble Lord's patience has been incredible. I also congratulate the present charity commissioner and his staff on continuing to carry out good work at the Charity Commission.
I thank the noble and learned Lord, Lord Browne-Wilkinson, for his speech today. I am delighted that as a Lord of Appeal in Ordinary he could not understand Part II of the Bill because neither could I. I thought that that was because I had a low IQ; but I am sure that the noble and learned Lord cannot have a low IQ. Therefore it is not surprising that I could not understand the part of the Bill. I hope that we shall be able to put that right. I 863 should also like to congratulate the noble Viscount, Lord St. David, on his speech concerning young people.
I should like to take up some points made by the noble and learned Lord, Lord Brightman, and the noble Lord, Lord Clitheroe, in relation to Clause 41 and small charities. In 1984 I was involved with the research carried out under Sir Charles Kimber into small parochial charities in the Oxford area to which the noble and learned Lord, Lord Brightman, referred. The noble and learned Lord mentioned some figures.
Perhaps I may tell the noble Lord, Lord Clitheroe, that I travelled around the country to find out what small parish charities were doing. I could give him a long list of the extraordinary things they were doing, similar to those which he mentioned, although in those cases the money was being put to a good purpose. I visited one parish where it was laid down by the parish charity that everybody who went to church at 11 o'clock on the first Sunday in every month should be given a loaf of bread. Therefore, every parishioner who went to church on the first Sunday in the month received a loaf of bread. If one had a Rolls-Royce one took away one's loaf of bread in the Roll-Royce; otherwise one just put it in one's bag. That had gone on for years. I do not know whether it still happens.
The noble and learned Lord, Lord Brightman, quoted figures relating to small parochial charities. However, he could not give figures covering smaller charities which have not amalgamated into neighbourhood trusts as we recommended. Nor can the charity commissioners provide those figures. Therefore, when they examine small charities how will the charity commissioners deal with those cases where money is being wasted and not being put to good use?
I do not know whether the charity commissioners will examine the problem by county or by area. In any event examining all those charities will involve an enormous amount of time and money. Therefore, I suggest that the charity commissioners, through their area offices—if that is how the work is to be done—should look for retired solicitors or accountants to work on a voluntary basis. It will not be possible to clear up the position regarding small charities without specialised knowledge and help, and there will certainly not be sufficient money.
Perhaps I may ask my noble friend the Minister what the position would be in this case. Suppose the trustees of a small charity debate amalgamation with other charities with the same terms of reference. The Bill states that the trustees must agree unanimously. If there is a trustee aged 80 or 90 who just wants to go on in the same old way and will not vote and therefore there is not a unanimous vote, what then? Is the trust to continue in its old, inefficient way?
The Bill states that the gross income of a transferred charity must not exceed £5,000. What happens if the income is just above that amount and the parish has no poor? What if a parish is found to have an income of only £25 per annum? Should it not 864 be mandatory for charities with a low income and no means of spending it to amalgamate with other charities?
I now turn to Clause 56 in Part II of the Bill relating to professional fund-raisers. Many noble Lords have spoken about that issue. I am not sure that I understand the distinction between a professional fund-raiser and a volunteer; but I shall not elaborate on that point since so many noble Lords have referred to it. A great many people in the country are becoming worried because they do not know what their position will be if they volunteer their services.
Finally, I turn to the question of resources. Here again, I reiterate what a number of noble Lords have said. We often pass good Bills through your Lordships' House and the other place but they are not implemented because there are not sufficient resources. Many voluntary organisations, large as well as small, are worried that in attempting to regulate charities as proposed in the Bill the Government may be creating a considerable amount of additional work for the Charity Commission and for charities. That in turn will inevitably lead to additional costs for charities, especially in accounting and legal fees. Will the Government make additional resources available to meet the requirements laid down in the Bill? I imagine that my noble friend will have great difficulty in answering that question. I was going to suggest that if he cannot answer now, he might write to me; but perhaps he will have to consult the Treasury first and that may therefore be difficult.
Many of the large organisations feel that the Bill will lead to the creation of a sizeable bureaucracy, and that for many charities, and possibly for the Commission, it will be difficult or impossible to meet the demands of the Bill.
This is a good Bill. There is a need for change. However, let us not have, as we have in the past and have on the statute book at present, legislation which is not implemented due to lack of resources. That would he a pity.
§ 6.8 p.m.
§ Lord Simon of Glaisdale
My Lords, it is with temerity that I intervene in a debate which has been and is to be conducted by so many formidable experts, both in a legal capacity and as practical charitable trustees. I do so only because, having been associated to some extent with the 1960 Act, I desire to say that the changes in this Bill which are founded on it are abundantly justified and well considered. I found the speech of my noble and learned friend Lord Brightman entirely convincing.
Obviously the Bill will have to be considered carefully in Committee. Sufficient has been said today to show the necessity for that. I do not wish to trench upon those considerations. With your Lordships' leave I should like to hang my remarks on the three main ways in which a charitable trust differs from a private trust.
The first is in the cy-près doctrine. If a private trust fails it fails completely. For example, if a private trust set up in a will fails for any reason the sum entrusted falls into the residue. But in the case of a charitable 865 trust, the court and now the commissioners have power lo apply the trust funds in some object which is as near as possible to the charitable object that was originally proposed—cy-près, in the old Anglo-French phrase. Perhaps I may ask the noble Earl a question. As I understood it, there was a reference in the White Paper to the fact that the cy-près doctrine was under consideration in the Home Office. If so, I should like to know the current thinking. I did not give the noble Earl notice that I intended to raise that point, so if I receive an answer it will be a bonus.
However, I did give the noble Earl notice of the two remaining points that differentiate a charitable trust. The first is its fiscal privilege. It might be useful to look at the vast extent of that privilege. As regards the Inland Revenue, the figures for 1990–91 show that for charities it was worth £800 million. I follow the mode of the noble Lord, Lord Richard, rather than that of the noble Earl, who likes to have a string of noughts on the end. As to local government rate relief, the latest figures are for 1989–90 when the sum was £177.5 million Together that makes almost £1,000 million.
I quote those figures only because that mode of operation is inconsistent with our general way of conducting public finance. Mr. Gladstone, that pillar of financial rectitude, looked at it with a baleful eye in the middle of the last century, but the Treasury has consistently maintained charities' fiscal privileges. When "the Treasury" is spat out as a rude word and when "hypothecation of revenue" is pronounced hateful y, we should consider that aspect.
The third point that I want to raise is the question of control over charities, originally exercised purely by the Chancery courts, but now very largely, since the middle of last century and extended by the 1960 Act, exercised by the Charity Commission. If one gives those fiscal privileges, it is incumbent to ensure that there is proper control over the way in which the funds are operated. A good deal of anxiety has rightly been expressed today about the bureaucratic extension. The 1960 Act was undoubtedly a bureaucratic extension and the Bill takes it further. Certainly, at such a time as this when we are undergoing a bureaucratic surge, we should consider the matter carefully.
I found what my noble and learned friend Lord Brightman said completely convincing. The powers taken ender the Bill are by and large justified. Nevertheless, I agree with the suggestion of the noble Lord, Lord Stanley of Alderley, which was echoed by my noble friend Lord Nathan, that there should be power to exempt suitable charities on whom the bureaucratic burden would be quite disproportionate.
I agreed with the noble Lord, Lord Stanley, when he said that there is a case for devolution and that it would be desirable to consult locally and to set up local advisory councils. The noble Lord, Lord Clitheroe, mentioned parochial councils. That seems entirely appropriate as a convenient source of local information, but one need not be confined to that. The Charity Commission should look anxiously for the formation of local advisory councils in order to bring decision-making as close as possible to the beneficiaries.
866 The only other point that I wish to raise relates to that originally made by my noble and learned friend Lord Browne-Wilkinson in his notable maiden speech and echoed by the noble Viscount, Lord Whitelaw; namely, that we have here yet again an example of legislation by reference to a previous Act—a main Act—which renders the Bill absolutely incomprehensible. I hope that I shall not offend the noble Viscount in his absence when I say that it showed somewhat of a nerve on his part to support my noble and learned friend. We have that method of legislation simply because it suits the Government's business managers. The noble Viscount was a notable and formidable business manager in another place. It suits them so well because, under the old system involving a Bill to consolidate and amend, the whole of the law, including that which is unamended, can be debated in Parliament to the fury of the Government's business managers whereas, under this system, only the amendments can be debated.
My noble and learned friend Lord Browne-Wilkinson suggested that a Keeling schedule was appropriate. As your Lordships know, that is a schedule in three types of typography: the original Bill, which is sought to be amended in ordinary print; the parts to be omitted by amendments in italics; and the parts that are newly inserted in bold. That is often useful, but it is entirely inappropriate where the Act that is to be amended is a massive Act, as is the 1960 Act.
I hope that the noble Earl will not be beguiled by that suggestion, particularly as there is an alternative. Obviously, the best approach is consolidation, but that takes time. However, something can be done quite quickly; namely, to have the Act as amended reprinted in the Statutes in Force. That does not need a skilled draftsman. Where the amendments are textual, as here, it can be done by scissors and paste.
I suggest that it is incumbent on the sponsoring ministry to get in touch with the editors of Statutes in Force as quickly as possible. It need not wait for enactment. I hope that the noble Earl will tell us that that is possible. Having said that, I agree with all noble Lords who believe that this is a valuable Bill and that it should be put on the statute book as early as possible.
§ 6.20 p.m.
§ Lord Ironside
My Lords, I should like to congratulate the Government on introducing this Bill in this House. I believe that there must be more hands-on experience of charitable affairs to be found among Members of this place than in the other place. Throughout the sectors of interest we have practitioners as well as benefactors and trustees as well as beneficiaries. I declare an interest as a trustee.
I believe that the Bill will allow trustees very much greater discretion in the management of their affairs. I intended to say that the soft mattress on which charities lie needs to be completely resprung; but I shall not press that point too hard in view of what the noble and learned Lord, Lord Simon of Glaisdale, has just said. However, I very much admire the point made by the noble and learned Lord, Lord 867 Browne-Wilkinson, who said that he would like to see what is left of the 1960 Act incorporated in the schedule. The Government have done their best to repair the matrix and fit new springs in one or two places where necessary, which extends the life for another generation or just until another directive appears from Brussels.
Since the 1989 White Paper other legislation has been enacted which borders on the charities' domain and which may now impact upon it. We need to ensure that the Bill still keeps charitable affairs on firm ground. We want to ensure that charities obtain the benefits of reform and advance from whatever direction they come—a point which was made by the noble Lord, Lord Richard, who said that this is now a growth area—and that they are not constrained by the trusts of centuries ago designed for those times, some of which have become moribund. On the whole the provisions of the Bill are much welcomed but we must always remember that the new rules and regulations are being imposed largely on the voluntary and part-time sector which is already complying with the 1960 Act and with good practices.
So far as I can see most of the squeeze comes on registration and accountability. That is where most charities will have to face extra effort and costs. I am concerned with a number of matters arising out of those particular clauses.
In its role of compliance office the Charity Commission is empowered to keep the register in the manner in which it sees fit. Quite frankly I cannot understand fully what that is supposed to mean. My noble friend Lord Ferrers said that the register will be a bank of information used for many things. If it implies that the commission is to use the best techniques available, I support it and I hope that the Government see fit to provide the resources necessary to beef up the Charity Commission so that it can perform in the way in which we all wish. However, if it implies that it can suit itself and in doing so makes life more difficult and expensive for corporate trustees, I do not support it. In any case, it would appear that some qualification is needed so that we can read in the Bill that the clause meets the requirements of the sector.
Turning to Clause 4 of the Bill, it appears to me that corporate trustees who administer more than one charity—some administer dozens of them—will be faced with a printing problem for each of their charities to comply. It is already common practice to carry out transactions through one account to avoid complication and expense. Surely it will be possible to use a unique registration numbering system, as is done with VAT registration, to indicate status. A further point on registration concerns the exemption of charities with incomes of between £15 and £1,000. If that implies automatic deregistration for such charities already registered, difficulties may arise with the Inspector of Taxes in making reclaims, getting dividends paid gross and investing in exempt funds. The case for being or staying registered seems to be strong but it may involve extra fees which small charities can ill afford.
868 I support Clause 5, which gives powers to the commissioners to blackball new names on the register, but I do not think that it goes far enough. Where a name is registered which is a look alike of a charity name which has ceased to exist through amalgamation or liquidation or which has changed (as "Dr. Barnado" has changed to "Barnados"), the commissioners do not appear to have powers to enforce a change because the original name may no longer be a legal entity, whether or not it was registered. A copyright name has protection of course and I suppose a name such as Oxfam falls into that category.
The call for greater transparency with reports and accounts is necessary if we are to continue having a healthy charities regime, but it makes more demands on voluntary and part-time charity staffs. My remarks strengthen what my noble friend Lord Stanley of Alderley has already said.
The long-term effects of those particular clauses on charities with a gross income of less than £100,000 may mean that volunteers are inhibited from taking office in local charities and that life is made more difficult for those who do so. Society treasurers play an important role as auditors and the call for more expert presentation may add needlessly to costs which are better deployed where they are entrusted and most needed. The present requirements of the Housing Corporation in so far as concerns housing associations go beyond the capabilities of many society treasurers. In the case of one Abbeyfield Society project the audit fee exceeds the cost of heating and lighting the home, which seems to me to be out of all proportion to the task.
Large charities already use professional auditors to audit their accounts and can more easily accommodate the fee; but small charities have limited funds. I hope that the auditing requirement in the Bill can be tailored to the small charity's need. As the noble Lord, Lord Richard, said, we need to know much more about the independent examiner or assessor, where he or she will fit in and what will be his or her role at the various levels.
The Bill gives trustees greater discretion and power in furthering their charitable objectives. Other legislation in education, housing, community care and local government is perhaps opening up new ways of working. For example, some charities have property, such as apartment blocks, which subsidise their almshouses. Should the charity wish to increase the almshouse capacity by using the apartments, its plans may be frustrated if at some time in the future, commonhold must be recognised. If that comes about, and it is hypothetical at the moment, I wonder in what way almshouse charities can protect themselves under this Bill. For example, would the commissioners recognise schemes to reserve such property for sheltered occupation if trustees make proposals along those lines?
There are many clauses in the Bill and I have referred to some of them. I believe that the Bill can be improved and that the knowledge and experience of Members of this place will help to improve it.
§ 6.30 p.m.
§ Lord Mottistone
My Lords, I am advised in particular by the National Council for Voluntary Organisations, the NSPCC and SANE. I have advised the Minister of most of the questions that I plan to ask. I hope that I shall therefore receive a few answers.
I welcome the Bill because it brings charity law up to date and aims to safeguard the public from bogus fund-raising. Such safeguards, if seen to be effective, will certainly help genuine charitable institutions to persuade people to contribute to their cause.
I particularly liked what the noble Lord, Lord Young of Dartington, said, if I heard him aright. He suggested new attitudes so that the Charity Commission could be a helper as well as a regulator. I believe that that suggestion might make progress. I shall be interested in any amendments on those lines.
Like other noble Lords I am worried that the charity commissioners will lack the resources properly to scrutinise the annual reports, annual accounts and annual returns referred to in Clauses 20 to 27. When setting up and developing the computer system referred to in the Explanatory and Financial Memorandum, one cannot help but doubt whether the charity commissioners will be able to convince the public that they have a grip on all the registered charities and that the bogus ones will not escape detection. It would be helpful to have reassurance from the Minister.
It is puzzling that Clauses 20 to 27 do not appear to relate to charitable companies. On the advice of our lawyers a few years ago, one of my charities changed itself from a trusteeship to a company limited by guarantee. Notwithstanding that change, although those of us who control and manage the charity are now directors and not trustees, it seems that we still fall within the definition of charity trustees under Section 46 of the 1960 Act. However, under Clause I of the Bill and the definition of "financial year" we are to be treated differently with regard to the annual statement of accounts. I shall be grateful if the Minister will clarify that point.
Clause 49 concerns me, as it does other noble Lords. it gives far too much power to the Secretary of State to prescribe fees for a range of activities performed by the commissioners. A strong point of principle is involved here. The Bill is welcome because it aims to provide extra protection to the public against bogus fund-raisers. Broadly speaking, protection of the public is a government responsibility paid for by taxpayers and charge payers, as are the police and the law courts. Clause 49 is questionable when considered in relation to the financial effects of the Bill to which the noble Lord, Lord Richard, made reference.
In addition, when persuading people to give money for the benefit of the causes for which charities are set up, a problem is to keep the amount of money spent solely on administration to a minimum. The generous charitable givers will not be so enthusiastic if they discover that money that they thought was going towards fitting out a lifeboat, helping children from being abused, or succouring unfortunate sufferers from schizophrenia was being siphoned off to help the 870 charity commissioners inspect their register, with the money going to the consolidated fund. A comment from my noble friend on that issue would be most helpful.
Other points have been drawn to my attention of which I have not given my noble friend advance notice relating to Clauses 56 and 58. Clause 56 develops new definitions of individuals involved in raising money for charitable purposes. However, it is so widely drafted as to affect potentially the position of all volunteers and celebrities who agree to raise money, whether or not they are paid. I differ slightly from my noble friend Lord Swinfen who detected that aspect within the clause. Several of the charities with which I am closely concerned have royal patrons who, without amendment to the Bill, may find themselves legally designated "professional fund-raiser." I cannot believe that that is intended, or that the royal persons would take kindly to such a role if it were cast upon them.
Clause 58 is also very broadly drafted and may create difficulties for even the most respectable charities. I shall leave the details to the Committee stage.
My noble friend Lord Swinfen also raised the issue of permits to conduct public charitable collections referred to in Part III of the Bill. Does the definition of "public charitable collection" in Clause 63(1) (a) include a coffee morning in aid of the local church or a new electric piano for a women's institute where the public at large are encouraged to come in and contribute? If so, is it necessary for local authorities to be burdened with giving permits for such simple events? On the other hand, is it sensible, as my noble friend Lord Swinfen explained in great detail, to burden the people who collect with such a task?
There is much to be done, although I welcome the Bill. I hope that we shall not spend too long amending it in an endeavour to meet the anxieties that have been expressed. It is important that the Bill reaches the statute book before the general election.
§ 6.36 p.m.
§ Baroness Masham of Ilton
My Lords, Britain is well known throughout the world for its many charities and the wide range of work undertaken by them. So many noble Lords are deeply involved with many aspects of charities that I feel your Lordships are the most appropriate people to scrutinise this important Bill and, it is to be hoped, to improve any aspect of the Bill which may cause problems for some charities. The importance of the Bill has been highlighted by having two maiden speakers. I congratulate both noble Lords.
I am involved in several charities. Many small charities work very hard; half their energies go into fund-raising. They do not have the time or expertise to compete with some of the large powerful charities. I therefore hope that the Government will take an overall look at the needs of all charities during the passage of the Bill through your Lordships' House.
I believe that most charities welcome most of the Bill. However, some are anxious that Part II relating to fund-raising activities may penalise charities which 871 do not have extensive fund-raising resources in-house. Clause 58 aims to target professional fund-raisers who often charge exorbitant fees. However, it ends up by interfering with charities which do not have the in-house capacity to carry out various aspects of fund-raising themselves.
Did consultation with charities on the material differences between the White Paper and the Bill take place? Were the Institute of Fund-Raising Managers and the major charities consulted prior to the publication of the Bill? Did the Charity Commission make a contribution?
In Part I, the Bill will require charities with an income of over £100,000 to be professionally audited. A charity with an income below that figure, but with significant assets, will escape that requirement. I ask your Lordships whether the Bill should include a provision on the size of assets that would require a professional audit? Another point concerns charities with an income below £100,000 but which receive a donation late in the year which pushes them above the limit. These charities may not have provided for the cost of a professional audit.
There seems to be most worry over Part II of the Bill. Most provisions are incredibly and deliberately wide and may have the effect of pushing charities to do fund-raising work in-house at a higher cost and to worse effect than if they were to contract out this work. Clause 58 targets the professional fund-raiser who charges either a flat fee or a commission on the amount raised, but it is so widely drafted that it will interfere with the fund raising of small charities.
The clause requires professional fund raisers to provide "a clear and accurate statement" which will include the names of the charities which will benefit, the proportion to be received by each charity, and the method by which the fund-raising appeal is to be determined. It seems that this clause requires that each potential donor be given this clear statement either verbally or in writing. A small charity without the resources to do the work in-house will be at a disadvantage compared to a charity with a large in-house fund-raising department. The charity that uses an agency to carry out its fund-raising would be required to issue the "clear statement" when each potential donor is approached, while the charity able to do the work in-house would not.
Perhaps I may give your Lordships three examples that may cause problems. One is the sale of Christmas cards bought by the charity and marketed by them directly or marketed by a third party or sold through a collective agent. All of these would require the "clear and accurate statement". For example, a collective agency making numerous charity cards available would have to say what percentage went to the agent, what percentage to the card manufacturers, and what percentage to the charity.
Secondly, direct mail appeals would be seen as solicitation for money. When an outside direct mail agency is used, the mail shot must include the "clear and accurate statement". The statement would need to state the fee or commission to be received by the 872 agency. It seems difficult to foresee how the clear statement of fees to be paid to the agency would be drafted.
A charity will have to make an assumption on the likely income from the direct mail exercise on the basis of past performance, but this assumption may prove to be overstated. In this case, the agency would receive a greater proportion of income than stated, and they would have therefore broken the law because their statement would not be accurate. Inevitably agencies may cover themselves by overstating their charges and understating the amount going to the charity. The result will be an unfair advantage to charities doing their own in-house work, however efficiently.
The third example is that many charities use agencies to do their tele-marketing. This proves to be cost effective. Clause 58 will require the agency to inform the potential donor of the basis on which their fee is calculated and the amount received for each solicitation. Once again charities may prefer to work in-house, however efficiently or inefficiently. The effect of Clause 58 might, as it stands, mean many charities will attempt to do their fund-raising work in-house, thereby escaping the requirements of issuing the "clear statement", because they will fear that such a statement will have an adverse effect on donors. This may increase costs and decrease efficiency in some cases.
Clause 63 deals with public charitable collections. It deals with appeals to members of the public to give money or other property in a public place, or by means of visits from place to place. Under this clause an individual who undertakes a sponsored walk breaks the law if, unknown to him or her, the charity does not have a licence. The effect of this clause is to make an innocent volunteer unwittingly liable to an offence.
In conclusion, it seems to me that the main problem lies in Clause 58. It clearly targets professional fund-raisers who charge exorbitant fees. At first sight we might all say "hurray", but it is so widely drafted that it will hit the fund-raising activities of small charities who use direct mail agencies or telemarketing so as to increase their effectiveness. These charities do not have the resources or expertise to do this type of work in-house, and will therefore be put at a disadvantage vis-à-vis charities that have extensive fund-raising departments. Many charities may be tempted to set up their own in-house direct mail and tele-marketing departments.
I shall be interested to hear from the Minister whether there is a likelihood of amending the clauses to exclude these types of activity. The Minister might say that perhaps some small charities should combine. This may be the answer in some cases; but there are many small charities doing specialised work, such as the Association for the Prevention of Addiction, and it might not be in their interest, or in the interest of those they try to help, to change their present status. I hope your Lordships, with your brilliant minds, will sort out some of these problems.
§ 6.48 p.m.
§ Viscount Mountgarret
My Lords, I should like to join the ranks of those of your Lordships who give this Bill a warm welcome. The desire to request, or impose on, the, trustees of charities the highest code of conduct is to be warmly welcomed. However, I feel that many of the provisions of this Bill are more applicable to the larger charities than to the smaller charities that have been referred to by many speakers this afternoon.
I should like to address my remarks principally to the charitable foundations of almshouses throughout the country. I should at this stage declare an interest, in that I have been chairman of the trustees of our local almshouses for the past 25 years, and I like to think that I have some idea of what I am talking about in this area. If the trustees were to meet the various requirements that it is suggested should be imposed by this Bill, the extra cost would be unacceptable and might well be the straw that breaks the camel's back.
There are about 20,000 people living in almshouses throughout the country, approximately 2,300 almshouse organisations, about 1,600 of which have an average income of approximately £15,000 per annum. Many of these almshouses are of some antiquity. Others are more modern, but all their buildings need continual repair and expenditure. With a level of income such as that to which I have referred, it is simply not possible to run on a day to day basis adequate accommodation and amenities such as gardens and so on and put sufficient funds on one side to provide for the future. Wooden doors, window frames, yards and so on must all be attended to. One day that will be extremely difficult to continue.
Generally speaking, almshouses are almost like a housing corporation, in that free housing is provided with a weekly maintenance contribution assisted by the Department of Social Security at little or no cost to the public purse. In the main they are looked after by people who have knowledge of local people and their needs. Almshouses are part of village life and part of rural England. I should be sad to think that that may be placed in jeopardy by too much bureaucracy and the expense related thereto.
Clause 21 refers to the requirement to produce professional audits, accounts and so on for charities with a turnover of less than £10,000. I believe that figure to be too small. A figure of £25,000 would surely be more acceptable. My noble friend Lady Masham referred to a suggestion that assets should be taken into account in assessing whether a charity should be involved in all those administrative procedures. That could be rather misleading. I entirely accept her point that, if the assets are all capital and investments and so on, that should be done. However, if I may be parochial, while the almshouse trust at home has an income of only £15,000, the site on which the houses stand and the buildings themselves are probably worth something like half a million pounds. Therefore the requirement is rather unrealistic. Perhaps that point should be borne in mind.
Clauses 24 to 27 relating to the annual report and annual return are very unsatisfactory because, as my noble friend Lord Stanley said, we are legislating for something about which we know nothing. It is not 874 right that we should give power to various Secretaries of State to impose regulations. If regulations are required to be produced, I ask my noble friend to consider whether they should be brought before Parliament before they are passed. We should have some control over that sort of action.
Also, about one-third of almshouse foundations are registered with the Housing Corporation. Surely to goodness the same rules which apply to the Housing Corporation, in relation to the foundations should apply to the Charity Commission. I hope that my noble friend is willing to look again at Clauses 24 to 27 to see whether or not something can be done to take away the requirement for almshouse charities to be treated rather like limited companies in that they must make annual returns.
Clause 30 causes me slight anxiety because it removes the requirement for an official custodian for charities. The knock-on effect of that, particularly in relation to small charities, will be that there will be more hassle for the trustees, who, as has been pointed out by one or two noble Lords, are volunteers. They give up their time voluntarily. They are not tax experts and, indeed, sometimes are not experts in anything. They just try to do the best they can for local people. This provision will mean endless formfilling, the reclaiming of tax and so on. If matters are overlooked, the charity may lose money. The official custodian is an extremely useful and welcome gentleman. I hope that he is not to be given the death knell by the Bill or, if he is, I hope that there will be provision for somebody else to replace him.
Clauses 33 to 36 contain the most remarkable piece of drafting I have ever seen. I believe it is misleading. I have probably misread it and almost certainly I have misunderstood it. However, the fact is that it appears to allow for trustees to maximise without the consent of the charity commissioners the capital value of any land or buildings which they happen to own. At one stage the clause implies that that is not so but later on it appears to suggest that it is so. Quite frankly, that is very confusing. At present the charity commissioners are, quite rightly, required to give approval to trustees who wish to sell any of their landed and/or building assets. I understand that, unless there is a particularly good reason for doing so, the charity commissioners generally decline to give that approval. I hope that I shall be corrected if I misinterpret this matter but I understand that under the Bill there is no such requirement for any reference to the Charity Commission or, indeed, anyone else.
I am sorry to be parochial once again but, if my trust has an income of £15,000 and has an asset worth £0.5 million, I may say to my co-trustees, "Come on, we will sell these, raise £0.5 million, ask the people living in the houses to find alternative accommodation and give them money from the proceeds of sale". But people do not want that. They would prefer to live in their homes despite the fact that the income from the charity is not very high. It seems to me extremely dangerous to have a clause which contains no requirement for trustees to refer to, and gain permission from, some body, even if it is not the Charity Commission—although I should have 875 thought that that would be the most acceptable body. I hope that my noble friend will look again at that matter.
Clause 48 refers to the level of weekly maintenance contributions. At present, the DSS gives financial assistance to those who are asked to provide weekly maintenance contributions if their income falls below what is necessary to pay those contributions. That is carried out in association with the rent officer and with the approval of the charity commissioners and is a scheme worked out by the National Association of Almshouses. It is all above board and there is no fiddling. If there is any complaint from the DSS, which I understand there is at present, then the department does not go to the trustees to ask about the level being charged but to the rent officer and/or the charity commissioners. It can then receive an answer from professional, independent people.
Clause 48 removes that provision and permits the landlords, the trustees, to charge any rent they wish to. For example, the rent might be increased from £20 to £100 per week, but I do not believe that the DSS would agree to make any contributions on that basis. I ask that the arrangements in the Bill for settling weekly maintenance contributions should remain as they are at present. I find those arrangements extremely helpful and have never experienced any problem.
Clause 49 refers to fees. If the charity commissioners wish to have a set of accounts, annual returns and so on, so be it. However, I do not see why the charities should have to pay to send something which they do not wish to send in the first place but are being required to send. That does not seem to be fair. The Charity Commission should pay the costs. It will be bureaucratic but that is a matter for the commission. I do not see why the costs should be borne by the charities. I agree that all charities, whatever their size, should, if only in a simple way, prepare accounts every year and send them in automatically. I support that. However I do not believe they should have to bear the costs.
I welcome the Bill. I hope that some of the points which I have made will be taken on board. Perhaps we shall give them further consideration in Committee.
§ 7 p.m.
§ Lord Meston
My Lords, I begin by apologising that I may not be able to stay to the end of the debate. From these Benches the Bill is given a welcome as producing important reforms that have become somewhat overdue.
In considering the Bill certain facts must not be forgotten. First, we must not lose sight of the main mischief at which the provisions are directed—abuse in the administration of charities. Secondly, we must not lose sight of the fact that the great majority of charities are properly and lawfully conducted and will continue to be so, even were life to go on without the legislation. Inevitably a balance must be struck between necessary measures to protect and retain the confidence of the public—both donors and beneficiaries—and measures which may become unduly 876 irksome and costly to the charities themselves and deter those who work for them, especially the volunteers upon whom they depend so much.
In a short debate we had some time ago dealing with the position of our charities in the European Community, we were reminded that British and Irish charities are quite unlike their counterparts elsewhere in Europe, which are more obviously commercial enterprises. The Bill recognises that that is not to say that charities here should not have to meet some of the basic requirements of good business practices which are stipulated by law for our companies. The relevant common factor is that they hold and use other people's money. We therefore welcome the measures which in some way move charities closer to company law and charitable companies nearer to charity law.
Clause 4 introduces the requirement for a registered charity to state on all documents that it is such. I am slightly worried about Clause 4(5), which provides that others, apart from the charity itself, may he charged with non-compliance with that provision. It is a potentially wide-ranging offence and could catch the individual sending a notice round his or her workplace soliciting sponsorship or support for a specific feat to be performed for a charity—whether it is the sponsored slim of the noble Lord, Lord Richard, or my occasional crawl round the London Marathon.
Clause 5 also contains echoes of company law in prohibiting the use of misleading names. Clause 5(2) (d) applies where,the name of the charity is … likely to give the impression that the charity is connected in some way with Her Majesty's Government".I am not altogether sure that that device would inspire much charitable benevolence.
More important are the provisions in Clause 20 onwards, requiring records and annual accounts with provisions for auditing and examination. Those must now be regarded as fundamental requirements for almost all organisations, although one can argue about the financial limits below which the requirement may be relaxed. We shall need to look hard at making life easier and certainly cheaper for smaller charities. Those provisions are a necessary reinforcement of the 1960 Act. It is astonishing that only 11 per cent. of registered charities submitted their accounts to the commissioners in 1986. Companies behaving in that way run the risk of being struck off.
The question of sanctions for non-compliance has been raised. It is a difficult subject. All one can say is that there ought to be some form of sanction, whether in the form of criminal penalties, as proposed by Clause 28, or perhaps replacing or reinforcing that by a running daily penalty so long as the default lasts. Such detailed comment is not appropriate at Second Reading. However, I hope that before the Bill leaves this House we shall gain a clearer idea of who will form the body of independent examiners. The Bill tells us that they will have accountancy qualifications and experience, and that the commissioners may give guidance. I hope that a body of specialist practitioners will soon emerge, either formally or informally, but again giving relief to smaller charities to whom accountants and auditors do not come cheap.
877 Finally, in Part I of the Bill, Clause 19 provides for unlocking dormant bank and building society accounts, to which the noble and learned Lord, Lord Brightman, referred. That procedure depends on the bank or building society concerned informing the commissioners that the dormant account exists. It is not clear to me how that will work in practice. Will the commissioners be conducting a general trawl of the financial institutions once the Bill is law? What will trigger disclosure otherwise? I assume that computerisation will enable accounts to be identified once they have been inactive for five years. I wonder why the onus cannot therefore be on the institution to draw such accounts to the attention of the commissioners.
Part II of the Bill seeks to define the boundaries between charitable and commercial enterprises. Inevitably there will be difficult cases on the borderline. The definitions in Clause 56 may need closer scrutiny. The noble Lord, Lord Richard, again touched upon that matter, as did other noble Lords. The expression "for reward" always causes anxiety and difficulty. It raises the question whether someone who solicits funds in return for reimbursement and perhaps a nominal fee is to be regarded as a professional fund-raiser. A further question arising under that part of the Bill concerns the ability of charities to seek an injunction under Clause 57. That provision begs the question why the broader category of charitable institutions is omitted from the statutory right to such relief. It seems to me that charitable institutions, as distinct from pure charities, will be just as vulnerable to the unscrupulous and just as much in need of injunctive relief in appropriate circumstances.
Finally, I should like to echo a point made by the noble and learned Lord, Lord Browne-Wilkinson, that the Bill is not for easy reading. It lacks a Keeling schedule, as several noble Lords pointed out. It may be that the 1960 Act and the provisions of the Bill make the overall totality of words too much for a Keeling schedule. If that is the reason for there not being one, we should have some other means for making the legislative process more manageable when dealing with that sort of provision. For example, the Bill contains various references to "exempt charities." One must either know or discover—as I discovered —that they are not defined in the Bill. They are referred to and defined in a schedule to the 1960 Act. That indicates to me that charities legislation must be a candidate for early consideration for a consolidation Bill. Building as it does on the great reforms of the 1960 Act the Bill is indeed welcome.
§ 7.9 p.m.
§ Lord Morris of Castle Morris
My Lords, it is customary at this point to say that we have had a most interesting and informative debate. We have had a most interesting and informative debate. Perhaps its most notable characteristic appropriate for a Charities Bill is the conspicuous charity of your Lordships' contributions.
In his opening speech my noble friend Lord Richard paid tribute to the Woodfield Report and to the main thrust of the Government White Paper. He pointed out that the time is ripe for a careful look at 878 the law governing charities. He said that we accept the need and, subject to certain caveats, we give it our support. In all subsequent speeches there seems to have been remarkably little dissent from that premise.
Perhaps I may remind your Lordships of the two remarkable maiden speeches we were privileged to hear today. The noble and learned Lord, Lord Browne-Wilkinson, modestly described himself as a technician of the law. Would that all technicians were so expert, so clear in their exposition, so jargon free and came to our assistance so promptly.
The noble Viscount, Lord St. Davids, made a most expert, elegant and philosophical contribution to our debate. He reminded us of the words of St. Paul in his Epistle to the Corinthians, which must be a basic text for all our thinking on charity. He used such words as "rectitude" and phrases such as "moral concern". For one brief moment they raised our heads above the level of petty parliamentary drafting. We look forward to hearing many more such admonitions from him.
The previous major piece of legislation on charities was enacted in 1960 since when the situation has changed dramatically. As was said by the noble Earl, Lord Ferrers, the world has changed almost beyond recognition. Now there are more than 170,000 registered charities which in 1990 raised £17 billion or, according to another authority, £17,000 million. Either way, the amount is no longer peanuts. These charities frequently undertake business activities to raise funds or to provide services. Many of them rely on fund-raising rather than on endowments and a modern regulatory framework is obviously necessary. I was pleased to see in Clause 4 that a registered charity shall be so described:in English in legible characters".That bodes well for the future of the Bill.
It is clear that Clause 2 has caused your Lordships a great deal of puzzlement and difficulty. The noble and learned Lord, Lord Browne-Wilkinson, found it necessary to suggest that Clause 2 needs looking at. The noble Lord, Lord Houghton of Sowerby, with characteristic directness, advised your Lordships to keep out of the Bill all the contentious questions of what is a charity. He further advised us not to say a word about religious cults. Even the noble Lord, Lord Allen of Abbeydale—whose name, we have been reminded, should appear as a separate schedule to the Bill —appeared to have had only a fleeting and tangential comprehension of what is intended in this mysterious clause. My noble friend Lord Richard described it as being extremely complex. I should describe it as having an absolutely Byzantine reticulation. For the noble Lord, Lord Stanley of Alderley, only Sir Humphrey elevated to the peerage would suffice. The noble Baroness, Lady Faithfull, was forced by the clause to doubt her own IQ, which no one else doubts. I hope that Her Majesty's Government will take on board the message that as regards Clause 2, in the words of a former Prince of Wales, something must be done.
Your Lordships appear to have had less difficulty with those parts of the Bill dealing with increasing accountability. The Bill will increase accountability by 879 requiring the submission of annual returns, reports and accounts, making accounts available to the public and requiring larger charities to have their accounts professionally audited. The noble Lord, Lord Young of Dartington, made the startling proposal that the commission should not merely be a monitor but should have the duty actively to encourage and assist charities. In that suggestion he gained the support of the noble Lord, Lord Mottistone. They believed that the Bill should contain a positive and pro-active role for the commission. They received support from the noble Lord, Lord Ironside, who was the only speaker to mention the dreaded word, "Brussels".
In dealing with this area of the Bill the noble Lord, Lord Mottistone, was sceptical about whether reports and computers could fully get a grip on the problem. Although that subject was not greatly featured this afternoon many noble Lords who have made their concerns known to me have found that as regards the report and accounts to which they are liable to have to return the remembrance of them is grievous unto them and the burden of them is intolerable.
The Bill is much concerned with reducing fraud and protecting donors. The noble Lord, Lord Houghton, gave the House an example of fraudulent fund-raisers raising thousands of pounds by false pretences. The noble Lord, Lord Allen of Abbeydale, drew our attention to the issue of trustees who have been convicted. He was not clear whether the proposal applied to exempt and excepted charities and asked cogently how we find out about such people. The noble and learned Lord, Lord Brightman, reminded us about Mr. Brown and his phoney boxes. He wondered what the position of Mr. Brown would be as regards this Bill. I looked to discover but I too found no answer. The noble Lord, Lord Swinfen, with his great experience and vast knowledge of this aspect of charities, warned your Lordships of the danger of throttling the fund-raisers. It is possible so to legislate to protect that everyone walks out of the door and finds something more interesting to do.
Your Lordships were much more at one on the issue of increasing efficiency. The noble and learned Lord, Lord Brightman, advocated a careful look at the processes for amalgamation. The noble Lord, Lord Young of Dartington, said that some of the swingeing new penalties are inappropriate and that conversely Clause 29 gives with the left hand what it takes away with the right. The noble and learned Lord, Lord Simon of Glaisdale, reminded us that fiscal privileges must be properly controlled. The noble Lord, Lord Stanley of Alderley, told us of the necessity of ensuring that the volunteer is not submerged under the requirements of returns, licences and accounts. Like milk and motherhood, your Lordships are generally in favour of efficiency and in that respect appear to approve of the general thrust of the Bill.
There appears to have been some anxiety about the difficulties of smaller charities. The noble Viscount, Lord St. Davids, focused his worry on the problems of the scouts and guides, giving them as typical examples of those smaller charities. The noble Lord, Lord 880 Clitheroe, pointed out the difficulties which required a blue cloth suddenly to become red flannel. The noble and learned Lord, Lord Brightman, told us about the difficulties of dormant funds and the problem of the amalgamation of charities. The noble Baroness, Lady Faithfull, referred to that matter as a means of preventing conspicuous waste. Most recently the noble Viscount, Lord Mountgarret, gave as a typical example of small charities the almshouses which clearly will find considerable difficulty with many of the Bill's clauses. Representatives of almshouses and other such bodies are worried about the weight of responsibility to be accountable.
The greatest weight of your Lordships' anxieties lay with the issue of fund-raising. The Bill includes detailed provisions on fund-raising consultants and public collections. We are all anxious to remove abuse and fraud and are concerned to ensure that the Bill is workable while not adversely affecting legitimate and well-managed fund-raising. The noble Lord, Lord Houghton of Sowerby, drew our attention to the dangers of television advertising. The noble Lord, Lord Nathan, told us of the danger of frightening off potential donors and of the difficulties connected with telethons. The noble Baroness, Lady Faithfull, drew our attention to Clause 58 which in her view penalised fund-raisers. She asked the Minister a series of questions to which I hope he will reply.
The issue of resources was at the centre of our anxieties. The noble and learned Lord, Lord Brightman, pointed out that unless resources are appropriate for the commission it will not attract people of the right high quality. The noble Baroness, Lady Faithfull, was anxious that the Bill might create extra work for the charities and for the commission. She said that wherever that is the case it must be properly resourced if the Bill is not to be a dead letter. Clearly the commission must have safe, basic funding to fulfil its tasks.
Fewer noble Lords were concerned with the problem of charging by the Charity Commission. In anticipation I had thought that some of my noble friends might feel fiercely about that matter. The noble Viscount, Lord Whitelaw, said that he thought, but only thought, that he was in favour, although by now he may have come to a firm conclusion. The noble Lord, Lord Allen of Abbeydale, reminded us of the difficulty of biting the volunteer.
As my noble friend Lord Richard reminded us, the problems of the charities are problems of growth, not of decline. To that extent we may rejoice and feel optimistic. In his reply to the debate I hope that the Minister may feel able to develop the Government's thinking and clarify some of the major issues which have been raised. I take those to include the regulatory structure, which will require 170,000 annual reports to be written by lots of people and read by someone; the problems of efficient audit; the problems of small charities and how the Bill will impinge on them; the stick and the carrot in the matter of fund-raising; and the issue of "public charitable collections" and their definition. The administration of charities must balance accountability with freedom. I am reminded of the words of Alexander Pope in the Essay on Man: 881For forms of government let fools contest; Whatever is best administered is best … In faith and hope the world will disagree But all mankind's concern is charity.
§ 7.21 p.m.
My Lords, we have had enormously knowledgeable contributions during the debate from those who have experience of charities, those who are expert in the law and those who work in charities. I am therefore glad that the Bill started its passage through Parliament in your Lordships' House.
I am grateful for the general welcome given to the Bill. It is an important and significant measure. As the noble Lord, Lord Meston, said, it is no Bill for easy reading. I never claimed that it was: I did not find that it was either. I am grateful for your Lordships' understanding because we are dealing with a difficult aspect of the law and the subject inevitably becomes complicated. I was especially grateful to my noble friend Lord Whitelaw for his support. As he said, no party points are involved. Thank goodness for that, as all we want to do is to try to get the Bill as right as possible. My noble friend has enormous experience both as a former Home Secretary and also now as the chairman of the Council for Charitable Support.
The debate was enhanced by the contributions of two maiden speakers. We were all delighted to hear the noble and learned Lord, Lord Browne-Wilkinson. He described himself as a technician. I have always thought that a technician is a fellow who has a screwdriver and has on a white jacket. I think that the noble and learned Lord was addressing his mind down other channels when he used that expression. He is a lawyer and was talking on technical points. We are grateful to him for his contribution. The noble and learned Lord was described by one noble Lord as a "charities Treasury devil". I thought that that was a rather insulting description, but I understand that it is a great compliment because it refers to the fact that the noble and learned Lord did much of the legal work involved in the Charities Act 1960.
My noble friend Lord St. Davids made an interesting and, as the noble Lord, Lord Morris of Castle Morris, said, philosophical speech. He brought in the moral issue. I was glad of that. I thought back to the occasions when his father was in the House and intervened on matters to do with canals and waterways. Indeed I remember his grandmother being here too. My noble friend has quite a history behind him. Both maiden speakers enhanced the debate and I know that we shall look forward to hearing again from them in the future.
The noble Lord, Lord Morris of Castle Morris, threw a large pebble into the pool when he expressed the hope that in my reply I would develop the Government's thinking and answer questions. I developed the Government's thinking at the beginning of the debate. I would not go down too well with your Lordships if I expanded on that as well as answered the plethora of questions which noble Lords put to me. I shall do my best to answer those questions.
The Bill covers a wide area and a good deal of law that has come to us as case law. The issue of resources was raised by the noble Lord, Lord Richard. He 882 doubted whether the Government would provide the necessary resources and asked whether the Charity Commission was agreeable to the burdens being placed on it. That was putting the matter fairly forcefully. My noble friends Lord Whitelaw, Lord Ironside, Lord Mottistone and Lady Faithfull and the noble Lord, Lord Allen of Abbeydale, were all concerned about resources. There is no doubt that the commissioners must have enough resources if they are to discharge their new role effectively. I cannot anticipate the size of the vote in the future, but we can look back at the Government's record over the past few years and see that the total resources in money terms allocated to the commissioners have increased in the four-year period 1987–88 to 1991–92 from £6.1 million to £21.6 million. That is a considerable jump by any standards. The number of staff employed by the commission increased from 335 in 1987–88 to 712 in 1991–92. We have ensured that resources have been made available to the commission for its work. To answer the point made by the noble Lord, Lord Richard, and my noble friend Lord Whitelaw, the commission is satisfied that it has the resources to deal with the annual returns, which will be an invaluable tool in the work of the commission.
The noble Lord, Lord Richard, referred to charity accounts and the independent examiner. The examiner will be a person independent of the trustees with, in the trustees' view, appropriate knowledge of accounting practices and charities in particular. He will not necessarily be a professional accountant. He could be, for example, a bank manager or someone in a similar position. The Bill allows the commissioners to give guidance to trustees on the selection of independent examiners.
Many noble Lords referred to the register and to the commission's ability to charge. The noble Lord, Lord Allen, referred to a black mark on the register. The Bill will allow commissioners to enter on the register any information which they think fit. That could include trustees' compliance, or otherwise, with statutory duties on trustees. If those duties have not been attended to, that could be marked on the register as well.
The noble Lord, Lord Allen, asked how many of the 170,000 charities are moribund. In the commission's census of charities this year, there was no response from about 16 per cent. of the charities of which it made inquiries.
The noble Lord, Lord Young of Dartington, referred to the role of the Charity Commission. I agree with the noble Lord that the commission should seek to encourage effectiveness of the charitable sector. That is one of its existing roles. The removal of some of its existing functions will allow it to devote more resources to that as well as to investigating and monitoring. The voluntary service unit in the Home Office has the task of supporting the voluntary sector generally and promoting voluntary giving.
The noble Lord, Lord Young, also referred to commissioners' access to the courts. He referred to the Attorney-General's consent. Giving the commissioners direct access to the courts is already a considerable extension. The noble Lord asked why 883 non-submission of accounts should be a criminal offence. We take the view that there has to be an effective sanction against failure to submit accounts to the commissioners. Although we were reluctant to introduce criminal offences, we believe that this one will form an effective deterrent against wilful default by trustees.
The noble Baroness, Lady Masham, asked whether an audit should be required where there were substantial assets. It is suggested that, where assets are substantial but the income below £100,000, there should be a professional audit. The trustees can choose to have a professional audit or the commissioners can require this to be carried out if they consider it necessary. The noble Baroness also asked about consultation on the fund-raising provisions. I can tell her that comments on the White Paper were received, for example, from the Institute of Fundraising Managers and that they were taken fully into account when preparing the Bill. She also asked whether the charity commissioners played a part in the process. The answer is that they did.
My noble friend Lord Mountgarret was disappointed at the demise of the Official Custodian for Charities. I realise that that causes difficulties. It will involve more work for the trustees of some charities. But such duties are consistent with the full exercise by trustees of their responsibilities for charity property. The savings from the divestment of the official custodian will provide more resources for better monitoring and investigation by the Charity Commission. My noble friend also referred to the level of the audit. I believe that he is mistaken to think that charities with an income of £10,000 or more must have their accounts professionally audited. In fact, the figure is £100,000. He also asked about the regulations on accounts. We want to get them right. We propose to consult widely with the representative bodies and charities on the detail.
The noble Lord, Lord Meston, referred to dormant charity accounts. He asked whether the commissioners would have to rely upon banks and other people volunteering information. That is not the way we see the provision working. The commissioners propose to link their power to the conduct of the rolling programme of local reviews which they propose to undertake.
Many noble Lords referred to charging. The noble Lord, Lord Richard, asked about charging in general. The purpose of this procedure is to introduce a measure of control into the growing area of professional fund-raising. We want to get it right. We do not intend to catch volunteers who are raising funds for charities. A number of representative bodies and charities have welcomed the broad thrust of these provisions.
My noble friend Lord Whitelaw also referred to the effect of charges on small charities. They will be modest—probably about £50 for registration. I do not believe that it can be claimed that that will be beyond the means of even the smallest charity which requires to be registered. Charities may also have to part with a small amount of money for a leaflet, or possibly pay 884 for selling off land if the commissioners' consent is still required. But even in that case, the charges will be linked to the value of the transaction.
My noble friend Lord Whitelaw asked where the £300,000 would come from. It is always hard to estimate total receipts in advance. But the best estimate we have is that at least £300,000 per year should be collected. There would probably be 4,000 registrations at £50 each and another £80,000 would be received from orders giving consents. Moreover, from the sale of leaflets and other such things about £20,000 would be realised. My noble friend also asked whether the receipts could be retained by the commissioners rather than being sent to the Consolidated Fund. I am sure that he will be the first to understand that there are difficulties with that suggestion. Receipts from charges will be paid into the Consolidated Fund. However, the fact that the commissioners are generating income will clearly count in their favour in future negotiations with the Treasury.
The noble and learned Lord, Lord Simon of Glaisdale, referred to the fiscal privileges for charities. I have no doubt that such privileges as charities enjoy continue to be justified. We are committed to encouraging a healthy and growing charitable sector. Charities make a huge contribution to the quality of life. The tax relief enjoyed by them, which amounts to £800 million a year, is an important contribution to the ability of charities to fulfil their purpose. If that were to be removed, I believe that some charities might find themselves in difficulty. The noble and learned Lord also referred to the cy-près doctrine. That was reviewed in 1989 and, since that time, the commissioners have adopted a more flexible use of the doctrine. In the light of that, the Government do not believe that legislative changes are needed.
A certain amount of concern was expressed during the debate about public collections. The noble and learned Lord, Lord Brightman, referred to his friend Mr. Brown. When I say, "his friend Mr. Brown" I mean that in the most generous sense. The position is that where a charity puts an unattended collection box in a public place—such as, a public house, a shop or a similar place—for members of the public to donate contributions, that will not constitute a "public charitable collection" for the purposes of the Bill. Therefore, such action will not require a permit from the local authority. The amount of money collected by these means is usually relatively small. Such collections do not have the potential to cause inconvenience to the public as is the case with other types of collection.
The noble Lord, Lord Richard, who always manages to think of something ingenious, asked what would happen if he organised a collection in the foyer of his office.
§ Lord Richard
My Lords, if the noble Earl is going to quote what I said he had better get it right. I did not 885 say that I was going to organise a collection. I said that if in fact I was trying to persuade people to sponsor me in a walk, a marathon or any other form of desirable activity which may be thought fit for me, the present drafting of the legislation would mean that I would have to get a licence. If I may be permitted to use the phrase, I think that is daft.
My Lords, I am sure that it would not be at all daft if the noble Lord were to encourage people to go on a fund-raising venture so that he, as he put it, could lose weight. I can assure him that if that happened under the circumstances which he suggested, he would not need to have a licence.
My Lords, we are getting into a Committee situation. I am trying to tell the noble Lord that, in places such as he suggested, it would be for the owner or manager concerned in the first instance to say whether and when a collection could take place. The Government think that collections in such places should be subject to the same kind of safeguards as other public collections; for example, those conducted in the street. It depends whether it falls into the category of a street collection, a public collection or a coffee morning. I think that I had better leave the matter there. The noble Lord is shaking his head with great vigour. I wish that he would come with me for a little of the way and realise that I am probably right, even if he thinks that I am wrong. We shall return to that matter at a later stage.
The noble and learned Lords, Lord Browne-Wilkinson, and Lord Brightman, and my noble friend Lord Swinfen, all wanted to see a Keeling schedule. They thought that it would make things easier. I am grateful to the noble and learned Lord, Lord Simon of Glaisdale. I say that because, as so often happens with the Law Lords when they take part in a debate, they actual y disagreed. He said that we should not be taken in by this beguiling advice. I understand why it should be thought that such a Keeling schedule would make life easier. I am bound to say that I am all for anything which makes life easier. I inquired as to whether we could do this, but I am advised that it is quite difficult to do so in these circumstances. Without going into too much detail as to why it is difficult, I shall seek to find out whether there is anything that can be done. However, my advice for the moment is that it would be inappropriate.
The noble and learned Lord, Lord Browne-Wilkinson, referred to amendments to the 1960 Act. I hope that this legislation will be an early candidate for consolidation. I believe that that point was made by the noble and learned Lord, Lord Simon of Glaisdale.
§ Lord Simon of Glaisdale
My Lords, I suggested that consolidation would be likely to be too slow and that consultation with the editors of the Statutes in Force would be a convenient preliminary step.
My Lords, I understand the noble and learned Lord's point. All I was trying to say was that in general we believe that that legislation would be a good candidate for consolidation.
886 The noble Lord, Lord Richard, the noble and learned Lord, Lord Browne-Wilkinson, the noble Lord, Lord Allen of Abbeydale, my noble friend Lord Stanley of Alderley and other noble Lords, said that they were worried about Clause 2. My noble friend Lord Stanley said that he might be too old to understand. All I can say is that he said that. I am sure that he cannot be that old. Whether he can understand is another matter. The provisions of Clause 2 relate to a difficult area of the law. Essentially, the clause empowers the commissioners to take account of the activities of any organisation when deciding whether it is a charity. They may do so, notwithstanding the fact that on paper the organisation is established for exclusively charitable purposes. The new power will be available to the commissioners at any time, not merely when they are deciding whether the organisation could or should be registered.
Under the clause, the activities that the commissioners will be able to take into account are those which the organisation may legitimately pursue under its trusts. In relation to certain religious movements about which public anxiety has been expressed, it could include evidence of their recruiting methods. It could also include evidence of any commercial or trading activities carried out under the terms of the organisation's governing instrument.
The noble Lord, Lord Richard, referred to land transactions. He and a number of other noble Lords referred to almshouses. Abuse can occur, despite the safeguards. Our view is that the statutory procedures that we propose will provide adequate protection in the overwhelming majority of cases. What is more, they will free the staff for the important business of monitoring and investigation. That will be a more efficient and cost-effective way of protecting charity funds. The proposed new statutory requirements are already followed by charities dealing with land under excepting orders made by the commissioners. Experience has shown that they work well. The commissioners will remain responsible for overseeing transactions where there is a danger of abuse.
A number of noble Lords referred to the professional fund-raiser. The noble Lord, Lord Richard, referred to the disclosure of information. On fund-raising, the regulations will require professional fund-raisers to pass over to charities all the proceeds of the appeal. They will then allow the charities to pay back to the fund-raiser the remuneration and expenses. It is right that that should happen because then those who give to the charity will know that the money goes to the charity and that the fund-raiser is thereafter paid, as opposed to the fund-raiser deducting his slice before the charity receives the money.
The noble Baroness and my noble friend Lord Swinfen referred to direct mailing. We have no intention of preventing direct mailing by or on behalf of charities, but we must ensure that donors' interests are protected. That is the purpose of the Bill. The provisions will not stop charities using direct mailing agencies. The costs of that are often much less than the administrative costs of undertaking similar activities using the charity's own resources. The noble Baroness 887 was worried whether regulating professional fundraisers would give an unfair advantage to the in-house fund-raiser. I do not believe that it does. The charities are subject to the supervision of the Charity Commissioners, whereas professional fund-raisers are not. It seems to us right to impose a degree of regulation over professional fund-raisers.
The noble Baroness also mentioned Christmas cards. Christmas cards which are sold by charities will not be caught. Christmas cards which are sold by an agent will be caught if the agent is receiving a reward for soliciting the funds for the charity. The Charity Christmas Card Council has welcomed those proposals.
There was some discussion about trustees. My noble friend Lord St. Davids was interested in the disqualification of trustees and whether other types of offence should be taken into account. I do not believe so. Trusteeship typically entails responsibility for money. It does not involve close contact with the client. That is why we believe it right to concentrate upon offences involving dishonesty and deception. Charities will not have access to criminal records, but they should exercise due diligence in whom they appoint.
A number of noble Lords were worried about coffee mornings. The noble Lord, Lord Richard, was not worried about them. In fact, I do not know what he was worried about. It depends upon whether it happens in his foyer. We have extended the scope of the public collections provisions so that promoters will be required to obtain a permit for a collection on private property. Our thinking is that collections on railway station platforms and forecourts, supermarket entrances, shopping precincts and so forth should be properly regulated. In such places it is for the owner or manager to say whether and when a collection can take place. Collections in such places should be subject to safeguards similar to those existing for other public collections. We do not intend the requirement to obtain a permit to extend to functions such as coffee mornings. That would impose an unnecessary level of control, and one that it is not our intention to introduce.
A number of your Lordships were anxious about small charities. My noble friend Lord Clitheroe referred to the parish council supervising small charities. The parish council is frequently the trustee of many small local charities. It would be inappropriate for the same body to be both trustee and supervisor. There would be a conflict of interest.
The noble and learned Lord, Lord Brightman, asked whether Clause 41 excluded permanently endowed charities. It does not. Any charity with an income which did not exceed £5,000 in the last financial year and which does not hold land for the purposes of the charity and which is neither exempt nor a charitable company may take advantage of Clause 41.
My noble friend Lord Stanley of Alderley referred to the effects that the Bill would have on small charities. I understand the worries that have been expressed—that is, the trustees of small charities in 888 particular will find their new roles onerous. I do not believe that they will. There will be changes. The position of trustee brings with it certain inevitable responsibilities. There cannot be effective monitoring of charities without the provision of better information to the commissioners.
The noble and learned Lord, Lord Brightman, asked whether the provisions of Clauses 41 and 42 should be compulsory. It would be wrong to make it compulsory to act as Clauses 41 and 42 allow. That would be strongly resisted by the trustees of local charities. They are independent, and rightly so. They are free to carry out their purposes as they think fit. If the trustees of small charities will not act, the commissioners have the power to remove them and to appoint new trustees who would be prepared in appropriate circumstances to make use of the powers in Clauses 41 and 42.
My noble friend Lady Faithfull also mentioned Clauses 41 and 42. She asked whether the resolutions of trustees should be unanimous. She referred to the old chap of 80 who did not want any change. We take the view that it is necessary for the resolutions to be unanimous. Amalgamating two charities or changing the purpose of a charity are major decisions. We believe it right therefore that the trustees should act in concert. If they are not unanimous, they can appeal to the commissioners for a scheme. The commissioners will consider the merits of what the trustees propose. They can make a scheme if that is appropriate.
My noble friend referred to local reviews of small charities. Under the Charities Act 1960, the commissioners can conduct inquiries into any charity or group of charities. They propose to use that power to undertake local reviews of charities. They may do that themselves or appoint a person to do so.
My noble friend Lord Mountgarret also referred to almshouses, and he pointed out that the commissioners would no longer have to approve rents. The commissioners have at present to approve the level of the contributions that the trustees charge almshouse residents. The Government believe that it should be the responsibility of the trustees themselves to decide the correct level of contributions. Each almshouse is different, and the trustees know the local conditions best. They also have the best interests of the almshouse residents in mind. The commissioners' withdrawal from this function will release resources for them to use in other situations.
The noble Lord, Lord Houghton of Sowerby, was worried about advertising by charities. The Independent Television Commission has a code for regulating television advertisements. Otherwise, it is a matter for the Advertising Standards Authority which, I understand, is working with the commission on joint guidelines on charity advertising.
There are a number of other points which your Lordships raised, and perhaps I may refer to two. My noble friend Lord Ironside mentioned charity names. The commission can require the charity to change its name if it is likely to mislead as to the purposes or businesses of the charity. He was also worried about commonhold. That is a technical point and, if I may, I shall look into it and write to him about it.
§ Lord Ironside
My Lords, before the noble Earl sits down, perhaps I may intervene. On commonhold, the problem is that charities may own apartment blocks and have money available to subsidise the almshouses. But they may wish to expand their activities and have more almshouses. What can they do now in order to preserve their rights if commonhold comes about?
My Lords, that is a technical point and I shall look into it and write to my noble friend with a more considered reply. He asked whether charities with an income below £1,000 would automatically be deregistered. The answer is that they will not be. The commissioners will remove the charity from the register only at the request of the charity trustees.
890 I am quite certain that there are many other points which your Lordships have made and to which I have not been able to reply. If so, I apologise. I do not think that it would be in the interests of your Lordships if I pursue questions any further but, if I may, I shall write to those noble Lords whose points I have not answered.
I am grateful to your Lordships for the general welcome which has been given to the Bill. I hope that it will be a success—I am sure it will—and that it will improve the charity law, which needs improving considering the changes which have taken place over the past 30 years.
§ On Question, Bill read a second time, and committed to a Committee of the Whole House.
§ House adjourned at seven minutes before eight o'clock.