HL Deb 06 February 1992 vol 535 cc348-56

3.40 p.m.

Report received.

Clause 1 [Interpretation of Part I, etc.]

Lord Richard moved Amendment No. 1Z: Page 1, line 23, at end insert: (" "registered housing association" has the meaning conveyed by subsection 3(2) of the Housing Associations Act 1985;").

The noble Lord said: My Lords, I apologise to the noble Earl that this amendment was tabled late. I attempted to give the noble Earl and the Government notice of what it contained yesterday afternoon and I hope that the message reached him. It may be for the convenience of the House if when moving Amendment No. 1Z I speak also to Amendment No. 1A.

These are paving amendments to a series of other amendments which have not yet been tabled. Perhaps I may tell the House the position and the problem. The main thrust of the amendments is concerned with preserving the right of certain charitable housing associations to register with the Charity Commissioners. At first sight it is an unexceptionable proposition. But the Bill creates certain difficulties.

The Charities Act 1960 does not compel excepted charities to register but it allows them to register if they so choose. Those provisions are unaltered by the Charities Bill that we are considering. Excepted charities include exempt charities as defined by the Second Schedule to the Act. Paragraph (g) of the schedule—I am sorry that the matter is complicated but it concerns a slightly legal argument—refers to industrial and provident societies. Many charitable housing associations are constituted as industrial and provident societies and are thus exempt charities. Around 25 per cent. of those exempt charities have chosen to register with the Charity Commissioners.

Although the 1960 Act permits registration, it specifically excludes exempt charities, even though registered, from the supervisory powers of the Charity Commissioners. They are excluded from each of the powers and the latter are defined on a section by section basis. Because of that statutory exclusion there is no opportunity for exempt charities voluntarily to make themselves subject to the Charity Commissioners' powers.

The housing associations are disturbed by the proposal and the result of the legislation we are considering. The Charity Commissioners are naturally under pressure to exert their supervision over charities and in that respect their powers are enhanced by the Bill. Not unreasonably the commissioners have expressed anxiety that there are certain registered charities over which they have no control. Their original idea therefore was to say that those charities should be deregistered. It is that proposal which has caused the difficulty for housing associations.

Housing associations which are exempt charities are extremely disturbed by the proposal. They believe—I think there is ground for that belief—that loss of registration will have a range of damaging effects and detract from the effectiveness of their charitable work. One solution may be for charitable industrial and provident societies to convert into charitable companies or trusts. I suppose that is possible, but apart from the cost and the unnecessarily bureaucratic nature of doing so, there is a simpler way.

Instead of deregistering exempt charities or forcing them to alter their constitutions, the thrust of my argument is that the 1960 Act and the current Bill be amended so that where an exempt charity is registered it is subject to the supervisory powers of the Charity Commissioners. Exempt charities which remain unregistered will be totally unaffected.

In tabling the amendments the National Federation of Housing Associations tells me that it is confident of the support in principle of both the Charity Commissioners, with whom they have already discussed the matter, and the Housing Corporation. That is the point at which these somewhat obscure and almost incomprehensible amendments are directed. I shall be grateful if the Minister can give some indication of how the Government approach the problem, which is a real one, and if need be we can return to these proposals at a later stage.

The Minister of State, Home Office (Earl Ferrers)

My Lords, I am grateful to the noble Lord for being kind enough to apologise for tabling these amendments late. They were tabled the day before yesterday and, as he realises, that is only a short time ago. That was a generous courtesy compared with the 20-odd amendments tabled yesterday. The noble Lord will realise that it makes it slightly difficult for us to understand the amendments, particularly when it is said that they are paving amendments for a lot of other amendments which the noble Lord did not find it suitable or convenient to table.

When I examined the amendments I wondered how they could operate without the paving amendment. The amendments will make sense only if Amendments Nos. 39 and 42, tabled by my noble friend Lord Mountgarret and the noble Lord, Lord Ennals, were to succeed. There would otherwise be no mention of registered housing associations in the Bill and therefore no need to define them.

Exempt charities are those listed in the Second Schedule to the 1960 Act. They are exempt from all aspects of the Charity Commissioners' jurisdiction, except that the commissioners may waive the disqualification of a trustee of an exempt charity from being a trustee under Clause 45 of the Bill. Exempt charities are therefore quite different from other charities, and deliberately so. They are exempt because they are subject to some other jurisdiction. It is unnecessary therefore to place them under the Charity Commission as well.

Exempt charities may be entered in the register at their own request and if the commissioners agree. Once registered of course they are registered charities but they are still exempt from the majority of the provisions which regulate a charity's affairs, particularly those which come under the Bill.

The Charity Commissioners' current policy is not to register exempt charities. Those which are currently registered are being removed from the register and the register will henceforth be a register of charities which are required to register—those which are subject to the commissioners' jurisdiction. The thrust of the Bill is to ensure that charities which are required to be registered should be registered and should disclose their registered status on various documents. The purpose of the disclosure is to alert people to the fact that they are dealing with a registered charity and that information can be obtained in regard to it at the Charity Commission; for instance, names and addresses of trustees, the accounts and so forth. That is what will happen to the charities which are registered. The commissioners cannot obtain that kind of information from exempt charities. It is therefore not appropriate for them to be registered.

Lord Richard

My Lords, I find that a somewhat disappointing answer. Indeed, I think it is right to say that that is not quite the attitude that the Charity Commissioners expressed to the housing associations in their discussions before the Bill arrived at your Lordships' House.

If they are registered now, although they are exempt, why on earth should they not continue to be registered exempt charities in the future? That is the simple point. I thought I understood the argument before the noble Earl rose. By the time he sat down I was not sure that I did. The noble Earl read from the piece of paper in front of him with that degree of assurance that a sinking man usually displays when he is grasping at a straw. If the noble Earl understood his answer better than I understood my brief, he is a better man than I am.

Earl Ferrers

My Lords, perhaps I may have the leave of the House, after that courteous response to my reply, to say that I understood the answer perfectly. The noble Lord asks why we need to register something that is exempt. The whole point of it being exempt is that it does not have to come under the auspices of the Charity Commission. The point of a register is to ensure that those charities over which the Charity Commission has jurisdiction are duly registered. People can go to the Charity Commission and find out the names and addresses of the trustees of the charities which are registered and cannot for those which are exempt.

Lord Richard

My Lords, I am not sure where that takes us. The difficulty that the noble Earl is not addressing is that it is not a question of registering de novo exempt charities; it is a question of charities which are at present exempt and which are also at present registered. In other words, it is not a question of doing something new but of preserving a situation which at present exists. In those circumstances I hoped that the Government would look at the amendment with some sympathy. Nevertheless, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 [The register of charities]:

Lord Houghton of Sowerby moved Amendment No. 1: Page 2, line 23, after ("charity") insert: ("( ) the names and addresses of at least three trustees of the charity.").

The noble Lord said: My Lords, this is a simple and small amendment but rather an important one. It deals with the registration of charities. Clause 2 of the Bill requires the Charity Commissioners to keep a register of charities. It amends the 1960 Act as regards what should go in the register. The clause provides that: The register shall contain the name of every registered charity and such other particulars of, and such other information relating to, every such charity as the Commissioners think fit".

My amendment proposes to add after the word "charity" in line 23, the names and addresses of at least three trustees of the charity".

The important words here are that there should be three names and addresses. The Charity Commissioners may seek further information under what I have just read for registration purposes. To ask for at least three names and addresses of trustees implies that for future registrations at least three trustees will be required. That is the underlying purpose of this amendment. I believe that two trustees is never enough and that one trustee is even less acceptable.

For registration purposes, to be regarded as a registered charity there should be at least three trustees. With great respect to my legal friends, there should also be a stipulation that of the three trustees not more than two should be acting professionally. As noble Lords are aware, trustees acting professionally can charge professional fees for their services. In the need for supervision of funds a lay voice can very often bring wisdom and experience. Nevertheless, for the moment I say that there should be at least three trustees.

In many ways this Bill does an enormous amount of good in tightening up the framework within which charities operate in this country. However, in some ways it does not do quite enough. The amendment provides one of the ways in which the administration of charities can be brought under tighter control. My fear about two trustees is that either they do not agree or that they agree too much under the domination of one or by agreement between two. My experience leads me to believe that a third trustee is almost indispensable if power is to rest in the hands of trustees. That is the effect of the amendment.

I hope that the Government will feel able to accept the amendment for future registrations. I do not know whether it is possible under subsection (3) (b) for the commissioners to stipulate three or any number of trustees. It may be that is not possible. That is why I want it to be in the Bill itself that at least three names and addresses should be registered. I do not believe that I need say any more. It is an added precaution in the search for integrity in the administration of funds.

Today we have genuine grounds for concern about the integrity of a great many people who are handling funds which do not belong to them. They are trustees. This work requires an unimpeachable standard of integrity and fair dealing. I do not believe that anyone should feel that there is a reflection here. It is merely that this provision fortifies the authority of trustees when there are three of them to take decisions. It is in that spirit that I hope that the Government will feel that it is a good idea and that the House will accept the amendment. I beg to move.

Earl Ferrers

My Lords, I am bound to tell the noble Lord that I find a little difficulty with his amendment. There are two technical reasons why I cannot advise your Lordships to accept it. The first is that the amendment refers just "trustees" rather than "charity trustees". If one uses the word "trustees" that could include custodian trustees, even the Official Custodian for Charities, who has no power or responsibility to manage the charity. The name of such a person is not likely to be of any use to any member of the public and would simply clutter up the register. When one considers that there are 170,000 charities, simple mathematics will show that if we were to accept the noble Lord's amendment there would be a great deal of material going on to the register.

The second reason is that some charities have fewer than three trustees, so the commissioners would be unable to comply in respect of those charities with the requirement which the noble Lord's amendment introduces. I am thinking mostly of charities which have a corporate body such as a parish council or a trust corporation as their sole trustee.

Even if one gets through that hoop, I believe that the amendment is unnecessary on other grounds. Clause 23(1) of the Bill will require the trustees of all registered charities to prepare an annual report containing: such other information relating to the charity or to its trustees or officers as may be prescribed by regulations made by the Secretary of State". The regulations will require the names of all trustees, and indeed some of the senior officers, to be given as part of the annual report. The annual report itself is required under Clause 23(6) to be sent to the commissioners each year; and the commissioners are required under Clause 25(1) to make the report available for public inspection. Therefore, the trustees' names will be in the public domain by virtue of being contained in the annual report.

The regulations to which I have just referred are not likely to require that the trustees' addresses be given in the annual report. I do not believe that there is great merit in requiring that their addresses should appear on the register. Most trustees would quite understandably give their address as that of the charity where the charity has an office and that address would appear on the register anyway. But to require trustees in all cases to give their private addresses would be an intrusion which would be difficult to justify. It could undermine the perfectly proper arrangements which trustees of larger charities commonly make to have all approaches made to them as trustees dealt with in the first instance by the charity's administrative employees.

There is another reason why I suggest that this amendment is not suitable. In a very few cases neither the names nor the addresses of trustees will be available to the public. For the sake of example, I am thinking of the trustees of a women's refuge who might be put in personal danger if their names and addresses were made publicly available. For that purpose, Clause 23(2) (b) allows regulations which are made under subsection (1) to enable the commissioners to dispense with that requirement that the information about trustees be included in the annual report.

I understand the concern of the noble Lord to have this information publicly available. From what I have said I believe that he realises that it is publicly available and that it is in the public domain other than in the kind of instance which I have just cited. I believe that that respects all the noble Lord's wishes.

4 p.m.

Lord Houghton of Sowerby

My Lords, I thank the noble Earl for that reply. I expected my proposal would relate to future registration. I was not seeking to impose this condition on charities already registered; that would be quite a big operation and put a lot of people to a great deal of trouble. But I thought it was a reasonable additional safeguard for the future. However, the Charity Commissioners will have some freedom to prescribe what they want from the trustees as a condition of registration. That and the report that they will have to make may have to suffice at the moment.

However, I feel that the benefits of charitable status should be conferred with fastidious regard to the conduct of charitable work. There are great benefits from registration as a charity. I remind your Lordships—because I shall refer to it again on another amendment—that every registration of a charity lays claim to part of the nation's revenue. A very large part of the nation's revenue is being relieved to bodies registered as charities. The amount of tax relief to charities at the present time amounts to billions of pounds. Indeed, the whole range of tax concessions shows how important this element is becoming. If one reckons charity relief, mortgage interest relief, vocational pensions contributions relief and relief of interest on pension funds from tax, there is stored up there not a redemption of a penny in the pound off tax, but a considerably larger amount.

Therefore, we cannot extend the benefits of registration, which are tangible and important, without laying down reasonable conditions under which that benefit shall be enjoyed. Otherwise, it becomes slack, and the registration of charities becomes the kind of thing to be sought, and obtained, without very much regard as to how things are to be run.

However, I shall not continue. I shall ask leave to withdraw the amendment and hope that the Charity Commissioners will take note of this short part of the debate.

Amendment, by leave, withdrawn.

[Amendment No. 1A not moved.]

Lord Simon of Glaisdale had given notice of his intention to move Amendment No. 2: Page 2, line 42, leave out from ("money") to end of line 2 on page 3.

The noble and learned Lord said: My Lords, this is to a great extent, but not wholly, a probing amendment. I am afraid that fortuitously this is the first opportunity I have had to move it.

I had a message a moment ago that this measure was required urgently on the statute book. The implications of that message were obvious: that your Lordships were required to deal with 168 amendments—many of them Government amendments—on a Thursday, with a break at seven o'clock. Under those circumstances, I shall not move this amendment, but I shall write to the noble Earl with my point and, if necessary, return to the matter at Third Reading.

[Amendment No. 2 not moved.]

Earl Ferrers moved Amendment No. 3: Page 3, line 8, at end insert: ("(7) Section 4 of the 1960 Act, as amended by this section, and with the omission of repealed provisions, is set out in Schedule 1 to this Act.").

The noble Earl said: My Lords, in moving this amendment, I shall speak also to Amendment No. 160. I undertook in Committee to consider whether something like a Keeling schedule could be produced to show how Section 4 of the 1960 Act would look as amended. Members of the Committee felt that it would be more helpful if that could be done. These amendments to Clause 2 and Schedule 1 are the result of that consideration.

Your Lordships will see, set out in Schedule 1, the version of Section 4 of the 1960 Act which will be produced if the Bill becomes law in its present form. The words in bold type represent words added or changed by the Bill; the words in ordinary type are already in Section 4. I hope that your Lordships will find that helpful. I beg to move.

Lord Peyton of Yeovil

My Lords, perhaps I may very briefly express my warm appreciation and gratitude to my noble friend for this amendment. Had the Bill remained as it was, it would have been necessary for anyone seeking to ascertain what the law was to have four or five books in front of him, the contents of which were far from clear. This amendment to the schedule to which my noble friend refers contains the law as it will be after this Bill is passed. I am extremely grateful to my noble friend for what he has done.

Before I sit down, I should like to go further. It is not often that I say this sort of thing, but as a Member of the Public Bill Committee I should like to say to my noble friend how very much I appreciate the way in which he listened with care and reacted to the suggestions made by the Committee during the debates that we had. I hope that he will accept my grateful thanks and pass on a word of appreciation to his officials and his advisers, who must have laboured mightily in the work that they have done between the Committee stage and the stage at which we are now. I am most grateful to him.

Lord Simon of Glaisdale

My Lords, at Second Reading there were suggestions that the 1960 Act, which is the foundation of this Bill, should be made, together with the Bill, a Keeling schedule to this Bill. The noble Earl rightly said that the 1960 Act was far too massive for that way of dealing with it. My noble and learned friend Lord Brightman then put down a mini Keeling schedule, singling out Section 20 of the 1960 Act, as amended. Although that had never been done before, the noble Earl welcomed it.

Although it had never been done before, neither my noble and learned friend nor the noble Earl suffered from centipede syndrome. The noble Lord, Lord Peyton, put down a similar, in effect, consolidation of another section, but put it into the body of the Bill by his amendment. It would be untidy to have one mini Keeling schedule in the body of the Bill in the enacting clauses and another in the schedule. Therefore like the noble Lord, Lord Peyton, I very much welcome what has been done in this case. In other words, both mini Keeling schedules are in schedules to the Bill.

Lord Jenkin of Roding

My Lords, as one who did not serve or attend the Committee, I should like to say how delighted I was to see, when the Bill was reprinted for the Report stage, that there was a Keeling schedule in it. I have long been one who has sought to encourage governments—when I have spoken from the Opposition and encourage parliamentary draftsman, when I have been in office—to include Keeling schedules. They make the task of those who have to use the law a great deal easier. I am delighted that my noble friend has succeeded in persuading the draftsmen to do that on this occasion.

I have never understood why it is that among Parliamentary Counsel there seems to be a sort of presumption against Keeling schedules. However, such has been my experience—they do not like to put these in. Ministers have to use considerable influence in order to be able to persuade them to do that. My noble friend referred to "something like a Keeling schedule" and the noble and learned Lord, Lord Simon of Glaisdale, referred to a "mini Keeling schedule". I have always understood that there is only one kind of Keeling schedule and that it can apply to a whole clause or to a whole part of a Bill. I suppose—I have not checked the records—that a Keeling schedule can apply to a whole Bill. This is a Keeling schedule and we welcome it, but are there other kinds of Keeling schedule?

Lord Harris of Greenwich

My Lords, I do not know whether this is a mini Keeling schedule or a major Keeling schedule but I warmly welcome the fact that it has been introduced. I agree with everything said by the noble Lord, Lord Peyton. It will now be a great deal easier for trustees to appreciate their responsibilities. I am glad that the noble Earl has moved the amendment.

Lord Richard

My Lords, we on these Benches also welcome the amendment. It is not an easy Bill, to put it mildly, in any event. The amendment and the schedule make it marginally easier for people to understand it. We are grateful to the noble Earl for taking on board the points expressed in Committee and for coming back in the way that he has.

Earl Ferrers

My Lords, I am overwhelmed that noble Lords should be pleased with what the Government have done. That is an unusual scenario in which to find oneself and I hope that it continues.

My noble friend Lord Peyton was kind enough to express his thanks. I shall pass on those thanks to officials and to those who have advised me because it is they who were responsible for advising on what is a difficult matter. I am glad that we have been able to do something that has met with the satisfaction of the House. The noble and learned Lord, Lord Simon of Glaisdale, was against a Keeling schedule and wanted to see statutes in force altered, while others were in favour of a Keeling schedule. The fact that we have somehow managed to satisfy both ends of the spectrum gives me personal satisfaction. I hope that it will make the Bill easier to understand.

On Question, amendment agreed to.