Charities Bill [Lords]

Public Bill Committee, 6 July 2006.

Standing Committee A

Clause 7

Andrew Turner (Conservative, Isle of Wight)

I beg to move amendment No. 8, page 6, line 8, at end insert

‘in particular by reducing the administrative burden on charities.’.

Joan Humble (Labour, Blackpool North and Fleetwood)

With this it will be convenient to discuss the following amendments: No. 66, page 6, line 35, at end insert—

‘(7) Giving information or advice or making proposals to any member or members of the public interested in registering a charity under subsection (3), including advice not to register.’.

No. 75, in page 6, line 35, at end insert—

‘(2A) The Charity Commission’s first general function shall include a systematic review of the public benefit test for existing charities.’.

Andrew Turner (Conservative, Isle of Wight)

Good morning, Mrs. Humble. It is a great pleasure to meet once again under your chairmanship. Outside, the sky is grey, and the sun has ceased to shine on our proceedings, but many of us will be pleased that it is a little less humid than on Tuesday. I understand that the M4 is shrouded in thunder—if one can be shrouded in thunder—from Reading to Somerset, and we may have some of that weather later today. However, none of it will be associated with the proceedings of this Committee. I assure you of that.

One of the Charity Commission’s objectives is defined in the Bill as being

“to promote compliance by charity trustees with their legal obligations in exercising control and management of the administration of their charities.”

However, there is some evidence that, in trying to meet that objective, the commission can—and, indeed, did, before it had that objective—act with a heavy hand rather than a light touch. That is driving some people away from volunteering as trustees or supporters of charities. Accordingly, I propose amendment No. 8, which would insert the following at the end of that compliance objective:

‘in particular by reducing the administrative burden on charities.’

On Tuesday, I mentioned my concern about the burden of registering as a charity and demonstrating public benefit. Let me quote that elusive piece of evidence that I could not find on Tuesday, but which is just as relevant to this debate, I assure you, Mrs. Humble. It was sent to my right hon. Friend the Leader of the Opposition via a Conservative party website. It began, “Dear David Cameron”. In fact, I recall that, on Tuesday, I expressed some scepticism about whether the writer was a lifelong Labour supporter, as he claimed. The fact that he addresses my right hon. Friend as “David Cameron” rather than Mr Cameron or David—

Ed Miliband (Labour, Doncaster North)

Or Dave?

Andrew Turner (Conservative, Isle of Wight)

Or, indeed, Dave. The fact that the letter writer did not do that indicates that he might not be an active Conservative party member. He goes on to say:

“I am E-mailing you to ask who is in the lead for the opposition on the Charities Bill, currently at second reading.”

That is why I have been passed this e-mail. It goes on:

“I should say that I am myself no natural conservative”—

with a small “c”—

“I am a Christian socialist and a life-long Labour”—

capital “L”—

“voter. However I have recently been press-ganged into being treasurer of my local church.”

That seems very much akin to the process involved in becoming treasurer of a Conservative association branch. Actually, I understand that that problem is common to all political parties.

The e-mail goes on:

“Now that I see the regulatory burden which is to be imposed by the Charities Bill, and the Statement of Recommended Accounting Practice (SORP 2005) imposed on charities by the Charity Commissioners, I can quite see why no-one else was prepared to be church treasurer. The regulatory burden which will be cast (by the well remunerated) onto the shoulders of the unpaid in the voluntary sector is in my opinion costly, wrong and oppressive.

I would like to interest someone from ‘your side’ in taking this forward with the Gov’t. I would hope this could be done by consensus, by raising the compliance thresholds to £500,000 a year”.

The Parliamentary Secretary will be pleased to know that I do not go along with that proposal exactly.

The e-mail continues:

“In this way medium and large charities would be well regulated and smallish charities would not be dragged into the regulatory regime by inflation (the lower £100,000 threshold has been unchanged since 1993. I quite understand any desire of the Charity Commissioners to extend the scope of that, but the desire to regulate should be balanced by realism. Else the Charity Commissioners will suffocate the volunteers on which small and middling charities rely.)”

That is a good example of the feeling among many charity volunteers, but it is a new example and, because it was sent only on 27 June, it was not put before the Joint Committee. It was not debated in another place during either of the Bill’s outings, but it clearly represents the feelings of volunteers.

There is other evidence as well. Mr. Brough says that he is bringing the issue to my attention for the

“sake of church treasurers throughout the United Kingdom who may not, yet, realise what regulatory burden is about to hit them. We are all unpaid, hard working and hard-pressed. We do not need this additional burden.”

Mrs. Humble, in case you have not heard of SORP, I shall read out what it says about itself. It says that it

“provides guidance on the application of accounting standards (compliance with which is considered necessary, in all save exceptional circumstances, to meet the legal requirement to give a true and fair view) in a manner which takes account of the particular circumstances of charities. In all but exceptional circumstances, charities preparing accruals accounts should follow this SORP’s accounting recommendations to assist in ensuring that their accounts give a true and fair view.”

Of course, none of us is opposed to the reasonable and fair regulation of charities or to proper accounting for the donations—one might almost say the pennies of the poor—that go into charities. Indeed, in my view, it is more important to take care of the pennies of the poor than of the donations of the wealthy.

However, the quality of accounts required by SORP appears to place an unnecessary burden on small charities in particular. That is why I tabled the amendment. The document from SORP grew from 68 pages and 240 paragraphs in 1995 to 89 pages in 2000; the 2005 version has 109 pages and 451 paragraphs. Its size has increased by more than 50 per cent.

Another example provides the same picture. It comes in a letter from Denise King, chief executive of Girlguiding UK that I only received on 15 June. I quoted it earlier, but shall quote it more fully on this occasion. It says:

“Recent emphasis in Charity Commission publications on the responsibilities of charity trustees and the prospective penalties for non-compliance are unhelpful to a largely activity based organisation such as Girlguiding UK, where...charity trusteeship is a very secondary consideration to the role of the volunteer adult leader providing activities for children...Unfortunately, there is some evidence that the insistence on highlighting charity trusteeship is discouraging adult volunteers, who...are averse to being threatened with the consequences of failure in the capacity of charity trustees.”

That is not the approach, certainly not the perception, that we wish to foster in the minds of those who want to devote some of their time to volunteering, whether through assistance to the young through the girl guides, to the advancement of religion through the Church or to the elderly through care homes and so on.

We understand why it has been necessary through other legislation—through Criminal Records Bureau checks, the Commission for Social Care Inspection and so on—to improve standards in care homes, children’s homes, youth volunteering organisations and so on. We understand all that, but what I am talking about is driving people from supporting charities.

It is essential that the Bill should bring forward small measures that redress the balance, and my amendment would introduce one of them. It might be described by the hon. Member for High Peak (Tom Levitt) as meeting the Cheltenham principle. Like most of my amendments, this amendment does far more than meet that. The Cheltenham principle, as I understand it, is based on what is nice, but the amendment is necessary.

Helen Goodman (Labour, Bishop Auckland)

May I say what a pleasure it is to serve under your chairmanship, Mrs. Humble?

Before I entered the House, I worked in the voluntary sector for eight years. I worked in two very different organisations. First, I worked in the Children’s Society, which is a large, well functioning, well known charity with a finance department, a fundraising department and human resources experts. I then went on to run the National Association of Toy and Leisure Libraries, which is a membership organisation with a turnover of less than £1 million a year. The association supports 1,000 projects across the country, ranging from a large co-partnership between the voluntary sector and the local authority in Manchester, which provides resources across the whole city, to really tiny projects, such as one that I visited in the local prison in Perth, where a woman provided play sessions twice a week for the children of people visiting members of their family.

I have to say that running the association was probably the most stressful work experience that I have ever had; it was certainly far more stressful than being a Member of Parliament or a Treasury civil servant. In large part, that was because we lacked the resources to deal with the regulatory burden, and it is important that the Committee take account of the fact that small organisations lack that administrative infrastructure.

The hon. Member for Isle of Wight (Mr. Turner) mentioned some aspects of the regulatory burden, but there are others, such as health and safety legislation, compliance with the fire officer’s requirements and the full panoply of employment law. Of course, I am not saying that it does not matter whether a building in which people work is safe from fire or that small organisations should be excluded from the provisions of employment legislation. What I am saying, however, is that we have an opportunity in the Bill to minimise, rather than maximise, those regulatory burdens.

Let me give an example of something that happened to my organisation. We were a few days late sending in our annual return, because one of the trustees’ addresses had changed. That triggered an automatic letter in the bowels of the Charity Commission, but that letter did not come to me, telling me that I was late; it went to the former trustees, telling them that I was late and that our charitable status was likely to be taken away if we did not comply straight away. It was as if the Revenue had written to the employer of someone who had failed to get their income tax return in on time to tell the employer that they should be sorting the problem out. I am sure that the Minister’s meetings with the commissioners are all very pleasant, but the bureaucracy at the interface is sometimes rather heavy-handed. We must therefore ensure that the administration of any new obligations that we introduce is such that we minimise the contact between the voluntary sector and the Charity Commission and ensure that it is absolutely streamlined.

I will not spare the Minister’s blushes. One morning last weekend, the Prime Minister was speaking about the Government’s work, and the only colleague he mentioned was the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Doncaster, North (Edward Miliband). The Prime Minister said how marvellous it was that we could grow the voluntary sector under the benign view of the Minister and strengthen the partnerships between the voluntary and the public services.

That aspiration will come to nothing if we do not ensure that the small, local groups and charities are not overburdened with administration and that we give them a stable funding environment. I am not going to support the Opposition’s amendment because we do not want to introduce a new duty on the Charity Commission of that kind. As we go through the Bill, we want to check that we are minimising the new obligations and that we are putting them in place in a way that will not create a new Byzantium.

Peter Bottomley (Conservative, Worthing West)

The hon. Member for Bishop Auckland (Helen Goodman) may be too young to have been working for the Children’s Society when I was chairman of the executive council in 1983-84. She and my hon. Friend the Member for Isle of Wight are right to say that the obligations on people that volunteer to help others can be overtaken by trying to understand their duties. In his response, the Minister may want to include a calculation of the number of hours that it would take all the trustees of all the charities to read all the paragraphs that there are in the SORP regulations.

I have been a trustee of various charities—some for a long time; others for shorter periods—and I go through regular training and retraining. Although I am probably one of the more experienced trustees, there is always more to learn and there are matters that I do not fully understand notwithstanding the benefit provided by the charity commissioners’ annual report and its useful reproduction of some of the cases that have been heard in the High Court, where issues between trustees or between the Charity Commission and trustees can be heard.

My hon. Friend’s amendment is sensible. I do not agree with what the hon. Lady said—that it adds to the requirements on the Charity Commission. It does not. It states that part of its aim should be reducing unnecessary burdens.

I ask that another point go through the Minister to the Charity Commission and to the Housing Corporation. I am a trustee of the almshouses trust, which provides accommodation to people with particular needs. Almost two years ago, we were faced with a situation in which the Housing Corporation requirement’s for the trust’s accounts was incompatible with the way in which the Charity Commission required the accounts to be produced. It took some time to get the Housing Corporation and the Charity Commission to allow us to produce a set of consistent accounts, rather than producing separate sets. In that case, there was probably some misinterpretation by us, the Charity Commission and the Housing Corporation.

When those in authority—whether they are in the Housing Corporation, the Charity Commission or the Government—spot the fact that a problem needs sorting out, they should bring it to the attention of their governors. Those problems do arise, but when they are spotted, it is a question of what action people take. When they spot issues that cause unnecessary anguish, effort and expense to people that are running causes for the public benefit—which is what charities are—it ought to be built into the requirements of the Charity Commission, let alone those of the Housing Corporation or Ministers, that they do something about it.

I am not sure whether we will hear the reasons for the other amendments that are grouped with that one. However, whether the amendment is carried or accepted by Government now or at a later stage, I hope that its purpose is accepted.

I set this challenge to the Minister. When the Bill is through, will he ask his advisers to sit down with the Charity Commission to see whether they can reduce the more than 400 paragraphs in the SORP requirements? That is only one of the matters that charity trustees need to look at. We need to see whether we can produce a simplified version that brings down what trustees need to understand to 20 paragraphs—unless charities are in certain categories of activity or size. What key things must people do and what makes it possible to be a good enough trustee? For anything else, they could go to appendices and the like. That change would be well worth accepting.

Tom Levitt (Labour, High Peak)

The amendment falls foul of the Cheltenham principle of being harmless if not entirely necessary. Does the hon. Gentleman not accept that the aim of the amendment to proposed new section 1B is covered by proposed new section 1C(2)2, which says that a general function of the commission will be to encourage and facilitate

“the better administration of charities”?

It covers the amendment’s objective completely.

Peter Bottomley (Conservative, Worthing West)

That might satisfy the hon. Gentleman, but it does not satisfy me. The word “reduce” is rather different from the words “encourage and facilitate”. We want to cut the unnecessary burden on those who take the responsibility of involvement in charitable activities. We heard the example of the girl guides, and there are many others who help young people, the elderly, the disabled or people with mobility handicaps without being required to encourage and facilitate better administration. It is quite clear to the hon. Gentleman and to me that reducing something unnecessary is part of better administration, but that is worth spelling out in plain English. That is what I have been trying to say to the Minister.

Let us accept the challenge of achieving what we are trying to achieve without making charity trustees dot every i and cross every t. So many trees would be sacrificed and so many hours diverted, when we all know through common sense what we are trying to achieve. Let us help the trustees to understand that as well.

Mark Todd (Labour, South Derbyshire)

I agree with the preceding remarks, but the principle applied in the work of the Charity Commission must be based on risk. I think that that is actually what the hon. Member for Worthing, West (Peter Bottomley) was saying. There are warning signs that the Charity Commission should be interested in the details of a charity’s affairs and should respond to the triggers that it has been sent.

On Second Reading, I referred to a case in my constituency—I shall refer to it again here—involving a small charity that consistently failed to produce any accounts because it lay below the limit for having to do so. It also failed to hold membership meetings of any kind and then ran itself into considerable difficulties involving a police investigation and inert responses from the Charity Commission. I thought that the signs had been there for quite some time that that charity needed greater scrutiny and care.

It is not inconsistent to support some of the empathetic remarks that have been made. Charity trustees have contacted me in rather the same tenor as those who have contacted the hon. Member for Isle of Wight, complaining of the burdens that they face, their difficulties accommodating such tasks in their diaries and the risks that they feel they are taking because of the apparent dangers of non-compliance. I must, however, balance that point with my experience that charities left to trundle away quietly in the gloom without any spotlight on what they are doing can lead eventually to serious harm. We need a sense of proportion and a proper understanding—I have not found the Charity Commission to be good at this—of the risk signals that are often present.

In my experience, what helps a huge amount is a local infrastructure that supports charities in some of the tiresome tasks that we all recognise are required. On Second Reading, I mentioned that the local authority that I used to lead offered an accounting service to charities in the area to support them with such tasks. It is perfectly obvious that small charities find it difficult to find people who are happy doing accounts, because such people are not that common in our world. Such people often take on multiple functions, and there is a limit to how many times they are prepared to do those tasks.

One of the most effective services provided by my local authority was one where it said, “We’ll pay for some accounting functions to support you, or even provide the professional services of some of our local authority accountants to assist to ensure that your compliance requirements are met, and, to be fair, to ensure that the local authority can continue to assist you in your activities.” Many of them had direct relationships with my council to provide various local services.

The provision of certain professional services to support small charities, such as accounting, design services if they require building support—the local authority in my constituency offers off-the-peg designs for small buildings and suchlike, which is very helpful to community-based charities—can genuinely lighten the burden of a stretched voluntary community. Many of us do not represent areas with large, middle-class, professional communities who are happy to lend their services to community groups for nothing. We represent much more mixed areas in which such people are rather fewer and further between. Small charities desperately need support and help with such tasks.

Will the Minister think carefully about the risks that I have mentioned? Consistent failure to produce any sort of accounts or information about activities from even a very small charity that lies below the limit for formal compliance ought to be an indicator of the need for some basic scrutiny of what they are up to.

Martin Horwood (Liberal Democrat, Cheltenham)

Thank you, Mrs. Humble, I am pleased to serve under your chairmanship again. On what is I suppose a point of order, I am not sure of the correct procedure in Standing Committee. Should we declare interests that we declared on Second Reading? If so, I should do so now.

Joan Humble (Labour, Blackpool North and Fleetwood)

The onus is on the Member to decide whether he should declare an interest. If you wish to declare an interest, make the declaration.

Martin Horwood (Liberal Democrat, Cheltenham)

Thank you, Mrs Humble. In that case, I shall make the declaration yet again, and refer hon. Members to my declaration on Second Reading, when I mentioned my role as a trustee of a blindness research charity, Fight for Sight, and my involvement in various local charities. As a trustee, I am very aware of how correct are many of the comments that have just been made about the onerous burden placed on the trustees and officers of charities to meet the regulatory requirements that now exist. I remember speaking for the Liberal Democrats in a Westminster Hall debate on volunteering, in which a constant theme was that the burden of regulation placed on charities was one of the greatest possible threats to volunteering in this country and to the massive valuable contribution that volunteers make to many and various non-governmental organisations.

SORP has been drawn up for laudable reasons: to try to provide a locked-in process of best practice, to guard against fraud and to provide a standard format that will allow the easy and appropriate comparison of charity accounts, but it is difficult to ensure that such things do not get out of control and damage the interests of charities. That does not affect only small charities.

When I was involved in the Alzheimer’s Society at national level, it was all very well for the finance department to comply with SORP at national level, but we also had hundreds of local branches and, because they were part of the same charity, their accounts had to be consolidated with the national charity’s. That meant that hundreds of local treasurers all around the country had to comply with the SORP rules, and they had to try to fit into that overall structure even though in some cases their income was extremely small. It was onerous and it was a struggle. As hon. Members have said, it often leads to difficulty in persuading people at local level to take on the role of trustee or voluntary officer or—in particular and as we all know—the role of treasurer. Treasurers’ roles are often almost impossible for local charities to fill. If regulations are so onerous and complicated to implement that volunteers are deterred from participating in charitable activity, the process becomes self-defeating.

We must nevertheless guard against the slightly naive belief, which seems to have crept into some of the debate, that smaller charities are somehow less inclined to fraud or less open to it, and are therefore less in need of regulation and guidance. There was a good example in this morning’s edition of The Independent, which demonstrated that even charities based in the most trusted of institutions can sometimes be open to fraud. If hon. Members looked at The Independent this morning they would have seen, next to what, I have to say, was a rather good article entitled “Lib Dems offer cuts in business taxes”, another article entitled “Charity manager stole £130,000”. It tells the story of Paul Olden from Southampton, who stole more than £130,000 from a relatively small charity that was based in this Palace. The charity was the Speaker’s Art Fund. So fraud does occur, and rules like SORP in some form or other are useful in increasing the likelihood, as the hon. Member for South Derbyshire (Mr. Todd) said, that such fraud will come to light and that bad practices in smaller charities will be exposed.

The hon. Member for South Derbyshire said that it was more dangerous to allow charities in some cases to—I think he said—“trundle away quietly in the gloom.” However, nothing he said particularly contradicted the principle that is enshrined in the amendment. The amendment does not seek the removal of such obligations—it merely says that the Charity Commission should be obliged to work for their simplification. The threat to the voluntary efforts of thousands of people is so serious that the amendment is worth making—the Charity Commission should be obliged to simplify regulation and administrative burdens whenever possible, so I support amendment No. 8.

We are also considering amendments Nos. 66 and 75. Amendment No. 66 would amend clause 7, which is concerned with the general functions of the commission, to include the function of advising people, on certain occasions, not to register as a charity. That might seem odd, but the intention is a very good one. The hon. Member for Bishop Auckland was right to say that there is a huge range of charitable activity in this country, some of it consisting of very small set-ups, often related to a single person’s life or memory. They are very worthy in intent but they often land themselves quickly in quite serious administrative difficulties, partly because of the regulatory burden on charities. Sometimes the people who establish those charities would have been best advised not to set up their own independent charity at all.

When the Alzheimer’s Society was concentrating on the issue of variant Creutzfeldt-Jakob disease we were approached by someone who had already taken the step of trying to set up their own charity in memory of a relative, to raise money for work on variant CJD and to look into research and support for people with the disease. However, it transpired that at any one time there are not actually that many people with variant CJD in the country—one could count them not quite on the fingers of two hands, but almost. So there was a very small pool of people to help, and the Alzheimer’s Society had a generously Government-funded programme that was aimed at supporting such people, raising funds for them and initiating research into variant CJD.

The people who set up that smaller charity would have been much better advised to launch a fundraising campaign, perhaps with restricted funds in memory of that relative, and given the funds to the Alzheimer’s Society. They would have escaped much of the hassle and burden that later came their way during the process of becoming a registered charity and jumping through all the hoops that we have discussed. The charity commissioners do not consider it their role to make a judgment or to advise charities or prospective charities. There is a very strong argument for giving them that general function and allowing them at least to issue guidance to people who are considering registering as a charity.

Mark Todd (Labour, South Derbyshire)

I am following what the hon. Gentleman says and I agree with a lot of it. Does he agree that different models of government may be more appropriate? People may decide that they want to make themselves a charity, but some sort of mutual organisation or another mechanism for supporting voluntary endeavour may be better. Perhaps such advice should be given. I do not know whether the Charity Commission does so.

Martin Horwood (Liberal Democrat, Cheltenham)

The hon. Gentleman is exactly right. That advice could form part of the general function whereby people were advised about their options, which might not necessarily involve charitable status.

We have talked already and will talk more today about the workload that the Bill gives the Charity Commission and how it extends the commission’s responsibilities considerably, without any expectation of its resources being extended. However, the provision before us provides another opportunity to lessen the commission’s workload, this time by giving it fewer charities to regulate. If the 80/20 principle follows, and much of the work of administering the accounts and returns of charities relates to small charities, we might reduce the commission’s administrative workload by offering the people who would register at that end of the spectrum the alternative of not registering but pursuing another direction.

Peter Bottomley (Conservative, Worthing West)

The hon. Gentleman’s point about the restricted fund is useful. We have the example of Warren Buffett, who has decided to put most of his money into the Gates Foundation. If one can do it with billions of dollars, one ought to be able to do it with hundreds of thousands of pounds, too. It might be worthwhile the Minister discussing whether the Charity Commission should have as one of its aims the appropriate amalgamation of charities—either total amalgamation or becoming a restricted fund within others. The hon. Gentleman’s point about reducing the hundreds of thousands of charities to a smaller number, where appropriate, is a good one.

Martin Horwood (Liberal Democrat, Cheltenham)

I agree. Warren Buffett’s donation, and his decision not to incur any administrative costs himself, is typical of the man. In that case, it was a wise step and a good example to much smaller donors and philanthropists. However, I am not sure about the hon. Gentleman’s point about mergers, because one advantage of the legislation—if we finally get it on to the statute book—is that it makes the administration of mergers easier for trustees to carry out. That is one reason why we support the Bill. Although not mentioned under the general functions as far as I can tell, I take it from the legislation that one of the commission’s functions is to encourage appropriate mergers and, thereby, the reduction of administrative costs. Perhaps the Minister will confirm that.

Tom Levitt (Labour, High Peak)

As I recall, the hon. Gentleman asked me about mergers during an intervention on Second Reading. I repeat the point that I made then. Although I am all in favour of the legislation making appropriate mergers easier, I am worried about encouraging mergers, because the voluntary and charitable sectors resent it when the direction of travel is imposed from outside. I hope that the legislation will remain neutral: facilitating mergers, not encouraging or hinting that they ought to be the order of the day.

Martin Horwood (Liberal Democrat, Cheltenham)

I sympathise up to a point, but the administrative tier of any charity is always, in a sense, a distraction from the charitable purpose and always places some burden on the charity if it takes any resources away from the sum that can be spent on the primary charitable purpose. There is a prima facie case in favour of merger that should not be discouraged, but should be encouraged if possible. I speak as a trustee of an organisation that has gone through the merger process. I wish that the Bill had been law before we had done that, because it was difficult and complicated.

Andrew Turner (Conservative, Isle of Wight)

I am not sure whether the hon. Gentleman is talking about facilitating or promoting mergers. His most recent remarks suggest that the process is difficult, whereas his earlier remarks implied some mild encouragement.

Martin Horwood (Liberal Democrat, Cheltenham)

Although my amendment does not relate to mergers—we seem to have strayed into that subject—my point is that the merger process is difficult at the moment. The Bill will make it easier and is therefore a good thing. I agree with the hon. Member for Worthing, West that, generally, where mergers are appropriate it would not be unreasonable for the Charity Commission to encourage them as a way of reducing overall administrative costs and burdens.

I should like to move to amendment No. 75, which is a probing amendment that would add to the first general function a systematic review of the public benefit test for existing charities. If the Government’s arguments on Tuesday are to be believed, the new legislation will make a difference, even in its unamended form. The application of the public benefit test to charities that were not previously required to pass it will potentially change their charitable status.

The Office of the Scottish Charity Regulator is embarking on a process of systematic review. I should be interested to know whether the Parliamentary Secretary envisages that process happening in England and Wales once the Bill has been passed or whether, when that has occurred and the lawyers conclude that not much has changed, and existing charities are assumed, until challenged, to have charitable status, that process will ever be reviewed systematically by the Charity Commission. That touches on the problem underlying many aspects of the Bill, which is that the Charity Commission is being given quite significantly expanded responsibilities—not greater powers—and there are more charities to regulate, more functions to carry out and more advice to be given. However, there is no expectation that the commission is to be given extra resources to carry out its wider responsibilities. As many hon. Members have already mentioned, there is some doubt about how effectively the Charity Commissioners carry out some of their existing functions, let alone their future functions. That is still an underlying worry, which I should like the Parliamentary Secretary to deal with.

Ed Miliband (Labour, Doncaster North)

Thank you, Mrs. Humble. It is nice to see you back in the Chair this morning.

We have had a useful and interesting debate. Let me start by dealing with amendment No. 8, tabled by the hon. Member for Isle of Wight. The debate has reflected the need for balance to ensure compliance, as my hon. Friend the Member for South Derbyshire said, and to do so in a way that is not heavy-handed, onerous and does not stifle charities’ initiative. The task is to strike the right balance, and the Bill does that.

Let me explain the effects of the Bill in the context of the underlying situation. It will improve the regulatory situation in respect of how the commission works. I refer the Committee in particular to the fourth duty listed in proposed new subsection 1D(2), which alludes to the better regulation principles enshrined in the Hampton report. Those are now in the Bill following debate in another place, precisely to ensure that regulatory practice and activity should be proportionate, accountable, consistent, transparent and targeted only at cases where action is needed. That is one aspect of what is happening.

A second point is that the Legislative and Regulatory Reform Bill, which is currently being considered in another place, introduces the concept of properly targeted risk-based regulation. Under part 2 of the Bill a new code of practice will be triggered for organisations that were considered by Hampton. The Charity Commission, as hon. Members may know, was one of the bodies that was considered in the report. The Government intend that the Charity Commission should be one of the bodies subject to the new code of practice.

The new code of practice comes from Philip Hampton’s report of March 2005. The principles of inspection and enforcement that he set out will form the basis of the new code of practice, which, I believe, is either being drafted or has already been drafted in illustrative form. I shall pick out for the Committee a few of the principles that Philip Hampton wants enshrined in the code of practice; regulators and the regulatory system as a whole should use comprehensive risk assessment to concentrate resources on the areas that need them most; all regulations should be written to be easily understood, implemented and enforced, and all interested parties should be consulted at the drafting stage; regulators should provide authoritative, accessible advice easily and cheaply.

Mark Todd (Labour, South Derbyshire)

The Minister is making an extremely powerful point. What tools of risk assessment does he think the Charity Commission might use? That is one of the critical areas; we all talk about risk assessment—or perhaps we do not talk about it enough, although it is increasingly common for the Government to do so—but noticeably little thought is given to exactly how to do it.

Ed Miliband (Labour, Doncaster North)

My hon. Friend asks a pertinent question. In a sense the decision is for the commission, and the hon. Member for Cheltenham (Martin Horwood) made the point that one cannot simply make a distinction between small and large charities in relation to where risk lies. However, I suspect, although I do not want to speak for the regulator, that very large charities are at greater risk than smaller ones because of the sums of money that they deal with.

The fourth principle set down by Philip Hampton that I want to highlight is that when new policies are being developed explicit consideration should be given to how they can be enforced using existing systems and data, to minimise the administrative burden. A lot is being done to achieve what the hon. Member for Isle of Wight intends by his amendment, which is something with which the Committee clearly has some sympathy.

As to the issue of trustees, there is, later in the Bill, much that is relevant to the amendment, which trustees will welcome. One such matter is the ability to use the charity’s funds to take out indemnity insurance if necessary, which the Committee will consider. Another is the Charity Commission’s ability to relieve trustees who have acted honestly and reasonably of personal liabilities if something has gone wrong. That will assist trustees.

I am sympathetic to the intention behind the amendment, but I do not think that it will achieve all that much. What is happening elsewhere is important. Having said all that about the need for risk-based, proportionate, well targeted regulation, I think that it is also right that the compliance objective is taken seriously, as hon. Members have highlighted. It should not somehow be diluted. We are talking about two separate stories; we need a compliance objective that is rigorous and properly upheld and, at the same time, across all of the commission’s activities, we need a regulatory system that does not impose unfair and excessively burdensome requirements.

Let me deal with the SORP.

Peter Bone (Conservative, Wellingborough)

Does the Minister agree that it would be much better to have this measure in the Bill than to rely on legislation that is in another Bill? If we want to highlight an issue, it should be in the Bill that we are dealing with.

Ed Miliband (Labour, Doncaster North)

I am very sympathetic to the intentions behind the amendment, and I do not want to suggest otherwise. What troubles me slightly about it is that we need to deal with compliance in a place that is separate from the overall approach of the Charity Commission to regulation. Nothing that this Committee does on this Bill must be seen to undermine the need for proper compliance. At the same time, it is right that we need to ensure that we send a message that the regulatory system should not impose burdensome regulation. On that basis, I am afraid that I am not inclined to accept the amendment.

Let me deal with the SORP. I confess that the knowledge shared by the hon. Member for Isle of Wight about the number of pages in the SORP is something of which I was not aware. That is why the Committee helps to enlighten us all. A SORP is a statement of recommended accounting practice; it is not part of the law, although parts of it are in law. It is important to say that only parts of the SORP are in law. The SORP is intended to be helpful; it is, after all, a statement of recommended practice.

Andrew Turner (Conservative, Isle of Wight)

If we are not careful, this may take us on to future amendments. As I quoted, the SORP actually says of itself:

“compliance with which is considered necessary, in all save exceptional circumstances, to meet the legal requirement”.

If one puts that information in front of trustees, they do not feel that they have much scope for doing something differently. I understand what guidance means, as I am sure the Minister and other hon. Members do, but I do not think that trustees who are presented with that phrase would feel that they had much scope to something a better way.

Ed Miliband (Labour, Doncaster North)

The hon. Gentleman makes an important point.

I was about to say that, as with everything that the hon. Member for Worthing, West has said so far in this Committee, I have sympathy for what he said. I think that I will accept his challenge to sit down, at least, with the commission and talk to them about the SORP and about whether there is a way in which it can be produced in a more comprehensible and shorter form. I suspect that that has probably occurred to the commission before, but I think it is a fair and important challenge. When I do so, I shall also take into account the comment made by the hon. Member for Isle of Wight in a recent intervention that the actual phrasing of the SORP is important. I understand that if the charity’s turnover is less than £100,000, the SORP does not produce significant requirements, even in law. However, I shall take up these issues.

In a sense, we are talking about the administrative practice of the commission. I think that the commission will have heard this debate and I hope that it will take account of it. My hopes that it will take account of it are buttressed by both the legislation that we have before us and what the Legislative and Regulatory Reform Bill will do. That will have an important effect.

Peter Bottomley (Conservative, Worthing West)

I thank the Minister for his kind words. I should have said earlier that, in my dealings with the Charity Commission over the past 30 years or so, I have found it to be almost invariably sympathetic and helpful, even though it clearly has problems with resources and with addressing all those who are responsible for charities. I should also say a word in favour of the SORP in general and I have one illustrative example. As a trustee, I was told, “If you make an unconditional commitment for future years, you’ve got to account for it.” I originally thought that that was a burden, but I now think that it is better to tell potential recipients of grants, “This is subject to us having the money and you continuing to perform.” The SORP has got us to change our practice, and one should not suggest that what it is trying to achieve is wrong, because it is normally trying to achieve something that is right and worth while.

Ed Miliband (Labour, Doncaster North)

Again, the hon. Gentleman speaks wise words, and I shall take them, and his earlier words, into account in my discussions with the commission.

Time is marching on, so let me move on to amendment No. 66, which stands in the name of the hon. Member for Cheltenham. The amendment concerns the commission’s advice on registering or not registering a charity, and the most interesting exchange was that between the hon. Members for Worthing, West and for Cheltenham about mergers, in which my hon. Friend the Member for High Peak also intervened.

We need to be careful that we understand the regulator’s role, which is to uphold the system of charity law, to ensure public confidence in it and to give advice on establishing or not establishing charities. We must be careful, however, that we do not place the commission in the position of persuader in respect of mergers or the setting up or not setting up of charities, because that is not really its job. The commission’s job is to respond to the population’s wishes and demands in respect of establishing charities and to give information and guidance, not to put itself in the position of persuader or demander. I fear, however, that the amendment tabled by the hon. Member for Cheltenham goes slightly in that direction.

Having said that, I do have a piece of good news for the Committee and, I hope, for the hon. Gentleman. The Charity Commission is about to publish a document called “Registering as a Charity”, which is designed to explain precisely what is and is not a charitable activity; which activities people think are charitable, but are not; why the promoter of a charity should consider working with an existing charity, rather than simply setting up a new one; what qualities trustees should have; and the principles that should guide them in taking on their role as a charity. Therefore, the commission will issue guidance and advice on charity law and on setting up charities.

However, we must tread carefully and ensure that we do not move to a situation in which the commission somehow feels able to tell someone who has gone through the process of establishing a charity and who has gone to the commission to register it, “Actually, our advice is that you should not have set up a charity.” By that point, the charity will already have been established, and the person will be moving to registration. I fear that the hon. Gentleman’s amendment moves us too far in that direction.

I am very sympathetic to the hon. Gentleman’s overall intentions, and the commission needs to be able to give people clear advice about the options open to them. However, it should do that in the role of neutral broker, not persuader, and I fear that the amendment takes us into the real of persuasion. I therefore hope that the hon. Gentleman will not press it.

As for amendment No. 75 on public benefit, it is pretty clear from clauses 3 and 4 both that a public benefit test will be applied to all charities—we had great fun discussing that on Tuesday—and that the Charity Commission will issue overall guidance on public benefit. As hon. Members know, illustrative guidance is already available. As I said in Committee on Tuesday, we will later consider different classes of organisation and the relationship to public benefit and the requirements.

On the phrase

“a systematic review of the public benefit”,

I am not sure that it is for us to tell the Charity Commission the nature of a review of public benefit. It is pretty clear what it will do: it will issue guidance and consider different classes of organisation, as well as whether and how they meet the public benefit requirements. I am cautious about appearing to give instruction to the regulator. The public benefit test is established and will, for the first time, apply to all organisations. There will be overall guidance and separate classes will be considered. From briefings that the Charity Commission has given Members and from what it has said in public, it is clear that it will take those responsibilities seriously. We do not necessarily need to move beyond that.

Martin Horwood (Liberal Democrat, Cheltenham)

I understand the Minister’s reluctance to issue directions to a regulator, especially an independent regulator such as the Charity Commission; that is entirely laudable, and a good instinct. As I said earlier, the purpose behind my probing amendment was to establish what the Minister’s expectations were. Certainly, in Scotland, OSCR will undertake a proactive process to identify charities that might not pass the public benefit test. Is that his expectation, at least, of what will happen in England and Wales?

Ed Miliband (Labour, Doncaster North)

It is a duty of the Charity Commission to ensure that all charities meet the public benefit test, which, for the first time, will apply to all charities. It is absolutely my expectation that if charities do not meet the public benefit test, we will discuss the situation with the Charity Commission; it will take action and do what is necessary, as the regulator. The levelling of the playing field will change the situation, because it will mean that the commission can rigorously pursue the public benefit test for all charities without exception. That is my strong expectation.

Tom Levitt (Labour, High Peak)

On that point, does my hon. Friend share my hope that, if a charity is either borderline or outside the public benefit regulations, the first action of the Charity Commission will be to work with it to try to bring it within the regulations and to ensure that it provides a public benefit, rather than to deregister it?

Ed Miliband (Labour, Doncaster North)

That is an important point. In a way, that should be the first, second, third, fourth and fifth action of the commission. It must always be a last resort to take away charitable status, partly for the reasons that hon. Members gave earlier that are to do with the fact—and I confess that I did not know this until I started delving into charity law—that once assets are put into a charitable trust, they cannot transition elsewhere. Those assets are a pledge, in a way, in perpetuity. Therefore, there is a massive interest in bringing charities back into compliance in cases in which the Charity Commission feels that there is not compliance.

Martin Horwood (Liberal Democrat, Cheltenham)

I entirely agree with the hon. Member for High Peak that—as has been pointed out by, among others, the Independent Schools Council in advice to its members—removal of charitable status is absolutely a last resort, and that the first step should be advice, consultation and working with charities to enable them to meet the public benefit test.

The Minister said that the process will kick off when a charity does not meet the public benefit test, but the question is how we know that it does not meet that test. Is he expecting the Charity Commission simply to rely on cases being brought to its attention, or is he expecting it to follow a process similar to that being followed by OSCR, by which the commission itself will review the charities that are likely to have a problem with the new public benefit test?

Ed Miliband (Labour, Doncaster North)

I feel somewhat as if we are dancing on the head of a pin; there used to be an automatic presumption of public benefit, which applied to religious charities and charities that dealt with poverty or with education. That presumption is being removed, so the Charity Commission will need to examine charities working in those areas to see that the public benefit test is complied with. That is widely accepted, not least by Jonathan Shephard of the Independent Schools Council, who featured heavily in the debate on Tuesday. I hope, on that basis, that the hon. Member for Isle of Wight will accept my reassurances and withdraw the amendment.

Andrew Turner (Conservative, Isle of Wight)

I understand and welcome the assurances that the Minister is giving, but I am disappointed in that he does not feel that some strengthening is necessary. The problem is that we have heard so much of this deregulation stuff before—deregulation, better regulation and so on. My now noble Friend Lord Heseltine swung through the jungle, as I recall, in 1990, or even earlier, deregulating right left and centre—

Ed Miliband (Labour, Doncaster North)

Something else happened in 1990.

Andrew Turner (Conservative, Isle of Wight)

The Minister is right. My noble Friend was engaged in much worse practices in 1990. Anyway, at some time, he was busy deregulating; there were a huge number of words about deregulation, and the tiniest conceivable achievement. As I recall, the present Government appointed Lord Haskin to deregulate—

Ed Miliband (Labour, Doncaster North)

Lord Haskins.

Andrew Turner (Conservative, Isle of Wight)

I apologise; I did not know there was more than one of them. Apart from the fact that less noise was made than by my noble Friend, there was not a huge amount of visible benefit. Now we hear that another document has been produced by someone equally eminent—or perhaps more so, since fewer of us have heard of him. We wonder when something will take effect. The better regulation principles have existed for a long time. The Better Regulation Task Force was set up, I think, under the first Government of the present Prime Minister. I am concerned that what is intended will never happen.

I want to give one further example, which concerns a trust called the Martha Trust Hereford. On 23 July 2003 it was notified that it had been selected at random for a visit by the Charity Commission—a visit, not an inspection. The purpose was

“to reassure trustees that they are following best practice and meeting legal requirements”.

A dozen documents were requested. On 31 December 2003, five months later, a date for the visit was set. All the documents were requested again. So far, I am told, that involved about five hours’ work for the trustees. On 21 May 2004, the visit took place, all afternoon. Two trustees, two directors and, presumably, representatives of the Charity Commission went through every section of a tick list. The conclusion was that the trust should have a strategic plan, a conflict of interests policy, formal trustee recruitment and an induction policy—and so it went on. No consideration was given to what the charity was doing for its beneficiaries.

That is the problem with regulation. The people doing the regulating have no interest in the outcome. They are obsessed with process. That is what drives trustees and others, and me, mad—as you can tell from my expression. The hon. Member for Bishop Auckland quoted toy libraries and I am sure what she said is true. She referred to the friendly meetings that Ministers have from time to time with the Charity Commission. I am sure that they get all sorts of wonderful assurances.

I am pleased that my hon. Friend the Member for Worthing West has also had good relations with the Charity Commission. When one is a trustee of a small organisation, the only time that one ever hears from the Charity Commission is when it is trying to get one to do something. For a trustee or chief executive of a large organisation, or certainly a Minister, I suspect that the treatment is slightly different. That is borne out by what the Parliamentary Secretary said about the greater risk to funds in large charities, although I accept that that was a hypothesis rather than an assertion. Yet, and I am doing my arithmetic quickly, 44 per cent. of inquiries by the Charity Commission in a year—I am sorry I do not know which—were devoted to charities that accounted for 5.4 per cent. of the gross annual income of charities. Some 44 per cent. of the inquiries went to 5.4 per cent. of the funds.

Ed Miliband (Labour, Doncaster North)

With the greatest respect, I agree with everything that the hon. Gentleman has said in his reply, but I do not think his amendment would be nearly as effective as a new system of risk-based regulation. In a sense, he is precisely pointing out the need for proper assessment in advance of where the risk lies and therefore where the visits should be made and who should be targeted for inspection.

Andrew Turner (Conservative, Isle of Wight)

That was my point in quoting Martha Trust Hereford. The commission has had the documents for five months so one would think that it could have read them and worked out whether it was necessary to ask for the document again, have the visit, ask for conflict of interest policies and so on and so forth.

James Duddridge (Conservative, Rochford and Southend East)

Does my hon. Friend agree that one measure for the amount of regulation is the number of people involved in that regulation? The Association for Charities, in a good document, “Power without Accountability”, quotes the figure for the Charity Commission as 550 people, which seems excessive. Hon. Members will also have received information about the Charity Law Association, which has been helpful. It talks of over 900 members, most of whom are lawyers specialising in charity law. To me those two numbers do not seem to stack up with what we are hearing about light regulation.

Andrew Turner (Conservative, Isle of Wight)

I agree absolutely. The Charity Law Association has been immensely helpful at all stages of the Bill and its genesis, but the fact that regulation can produce productive employment for 900 lawyers suggests in itself that there is far too much to do. I am concerned that the Bill extends the scope and the power to intervene.

I accept the Minister’s assertion that he does not want to dilute the compliance objective and that my amendment may be in the wrong place. I do not accept that there is no need for the amendment, because I believe that some further action is required in the Bill to ensure that the good intentions to which he referred and that I accept are genuine are carried through into action. You will have noticed, Mrs. Humble, that I have tabled many amendments broadly on the lines of requiring a lighter and more proportionate touch and fairer and more reasonable activity by the Charity Commission. I hope that between now and Report the Minister will look at all the amendments that cover the area and see whether it is possible to strengthen the requirement for more proportionate action in the Bill and to impose a lighter touch and a lesser burden on trustees, in particular, and trustees in small charities most particularly.

I would not support one of the amendments tabled by the hon. Member for Cheltenham, which deals with the systematic review of the public benefit test, because it is a further imposition on charities. On the other hand, I do not see how the Charity Commission can get away without undertaking a systematic review and I am concerned about the resources for which the Charity Commission will bid in order to carry out that review and the burden that it will place on charities. It may be to the benefit of all the other charities—they will be able to take their eye off the ball, stop worrying about small charities and stop undertaking the type of sustained work that they appear to be doing.

I would like to reflect on what the Minister has said today. I hope that he will reflect on what I have said about other amendments and the prospect of strengthening the balance—there has to be a balance—in the Bill on Report. I beg leave to withdraw the amendment.

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move amendment No. 67, in clause 7, page 7, line 11, at end insert—

‘1A. So far as is reasonably practicable the Commission must, in performing its functions, act in a way which maximises the benefit to the users and beneficiaries of charities’ services and activities.’.

Joan Humble (Labour, Blackpool North and Fleetwood)

With this it will be convenient to discuss the following amendments: No. 9, in clause 7, page 7, line 25, at end insert ‘and act in a fair and reasonable manner,’.

No. 10, in clause 7, page 7, line 31, at end insert—

‘(7) So far as is reasonably practicable the Commission must, in performing its functions, distinguish between—

(a) its regulatory role,

(b) its advisory role, and

(c) its investigatory and remedial role.’.

No. 76, in clause 7, page 7, line 31, at end insert—

‘7. The Commission must, in appropriate cases, have regard to the desirability of providing extra support, advice, guidance and encouragement to new and developing charities from a diverse range of communities.’.

No. 103, in clause 7, page 7, line 31, at end insert—

‘7. In performing its regulatory functions the Commission must act fairly and reasonably, and with regard to the interests, of charity beneficiaries.’.

Martin Horwood (Liberal Democrat, Cheltenham)

Amendments Nos. 67 and 103 are similar. Amendment No. 103 would insert into the commission’s responsibilities

“In performing its regulatory functions”

the responsibility to

“act fairly and reasonably, and with regard to the interests, of charity beneficiaries.”.

The hon. Member for Isle of Wight and the hon. Member for Rochford and Southend, East (James Duddridge), have already mentioned the concern of some within the sector that the Charity Commission does not always act fairly and reasonably in all circumstances. That is a tall order for any public organisation and I am sure that I, like the hon. Member for Worthing, West, would praise the way in which the charity commissioners have carried out many of their tasks and responsibilities in the past, and praise some of the individuals who have carried out those responsibilities. Nevertheless, there are concerns.

The hon. Member for Rochford and Southend, East mentioned a document called “Power without Accountability” published by the Association for Charities. If the Minister has not read it, I commend it to him. It presents a number of cases, all of which could fairly be described as quite difficult and in which both sides to the case can be seen. However, even if part of the trend that the association identifies is true, it should give the Minister some cause for concern. The association says that in many cases, the Charity Commission systematically sided with larger or parent charities against smaller ones or against branches of charities.

James Duddridge (Conservative, Rochford and Southend East)

Would it be helpful if the Minister offered to lay before the House some comments on that report, which deals with very specific cases? They look like the type of thing that comes up in individual constituency cases. I see the Minister frown, and I do not want to overburden him, but it would be useful to see which trends he accepts and which accounts he considers to be more one-sided.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful for that intervention. It is for the Minister to decide in what form he wants to reply to that report. Perhaps Committee stage or Report might be an appropriate time to address some of the concerns that it raised.

Some of those concerns are quite serious, relating to matters such as the appointment of receivers and managers who have no experience of running charities, thereby displacing the existing trustees or managers of charities; and the fees of receivers and managers being allowed to overrun those estimated in the original tenders by 100 per cent., 200 per cent., 300 per cent. or more—sometimes by hundreds of thousands of pounds. A trend was identified in which costs are imposed on smaller charities without any possibility of challenging the process by which those costs are incurred. Those are genuine and serious concerns. As I said, we should be concerned even if only one or two of them are correct or identify a real problem.

The duty to act reasonably and fairly was discussed in another place, at which time the example of the Little Gidding Trust was raised. The High Court judge, in ruling on whether the commissioners had acted appropriately according to the law, failed to consider whether they had acted fairly and reasonably in the interests of shortening the hearing at the High Court. That is the practical difference that the amendments would make: if they were included, there would not only be a general moral obligation on the courts to decide whether the commission was acting reasonably and fairly, they would have to consider that duty in cases like the one relating to the Little Gidding Trust.

The amendments will make a practical difference, contrary to what Lord Bassam claimed in the debate in another place, and they have a great deal to recommend them. After all, who could possibly oppose the insertion of acting reasonably and fairly into a Bill?

Amendment No. 76 is different and would include other responsibilities for the Charity Commission, including a need to have,

“in appropriate cases, regard to the desirability of providing extra support, advice, guidance and encouragement to new and developing charities from a diverse range of communities”.

That reflects the changing face of the charity sector, which we discussed on Tuesday, and how it must be more inclusive of organisations and communities that may not necessarily follow the established model of charitable organisations, particularly membership organisations.

I have experience of organisations such as the MS Society and others, which have tried hard to make themselves more welcoming and inclusive, for example, in relation to members of ethnic minorities. However, in some cases such organisations have struggled to do that when established branch structures have a particular ethos and, inevitably, an esprit de corps that might be off-putting to newcomers or those who do not seem to fit the traditional ethos. There is a challenge to organisations, including many larger charities with established memberships and established ways of doing things, to reach out to minority ethnic communities and others from different social backgrounds. Those organisations must challenge the twinset and pearls image of some local charities, which can be off-putting to some people and could be a bar to them gaining the full benefit of involvement in membership organisations.

The MS Society is successfully tackling that problem and is doing great work on inclusion and ensuring that its membership and local branches are representative. However, it would be wise and sensible to give the Charity Commission a responsibility to encourage new and developing charities that provide an alternative route into involvement in the charity sector for people from other backgrounds. I am keen to see the amendments progress.

Andrew Turner (Conservative, Isle of Wight)

I shall speak first to amendments Nos. 9 and 10. The proposal to oblige the Charity Commission to act fairly and reasonably links to the lead amendment in the previous group. The Government have resisted such a provision with, it seems to me, a disproportionate amount of energy. It seems to be a reasonable objective to place on an organisation such as the Charity Commission.

The hon. Gentleman referred to the Little Gidding Trust case, which I understand was exactly as he stated. Lord Bassam said in the House of Lords that the commission

“would not change its behaviour”.—[Official Report, House of Lords, 12 October 2005; Vol. 674, c. 335.]

Standing Committee A

Clause 7

Roger Gale (Conservative, North Thanet)

I remind the Committee that with this we are discussing the following amendments: No. 9, in clause 7, page 7, line 25, at end insert ‘and act in a fair and reasonable manner,’.

No. 10, in clause 7, page 7, line 31, at end insert—

‘(7) So far as is reasonably practicable the Commission must, in performing its functions, distinguish between—

(a) its regulatory role,

(b) its advisory role, and

(c) its investigatory and remedial role.’.

No. 76, in clause 7, page 7, line 31, at end insert—

‘7. The Commission must, in appropriate cases, have regard to the desirability of providing extra support, advice, guidance and encouragement to new and developing charities from a diverse range of communities.’.

No. 103, in clause 7, page 7, line 31, at end insert—

‘7. In performing its regulatory functions the Commission must act fairly and reasonably, and with regard to the interests, of charity beneficiaries.’.

Andrew Turner (Conservative, Isle of Wight)

May I say how pleasant it is to see you once again in the Chair, Mr. Gale? The sun is coming out. I do not think that it will be as hot as it was on Tuesday, and I am advised that we expect thunder later—outside, that is.

When we rose for lunch, not that I had any, I was in the middle of a quotation. Lord Bassam of Brighton said that the commission

“would not change its behaviour as a result of the addition of these words”.

It is only proper that I should conclude the quotation, which is

“and so the amendment would have no practical effect.”—[Official Report, House of Lords, 12 October 2005; Vol. 674,c. 335.]

I was speaking to amendment No. 9, which would place an obligation on the commission to act in a fair and reasonable manner. The amendment has some history. Paragraph 161 of the Joint Committee report on the Bill said:

“Under current charities legislation, there is no specific objective set out for the Charity Commission to act proportionately and reasonably, but such a requirement is placed on all public bodies by common law.”

Ministers rested their case in the House of Lords on that responsibility. The National Council for Voluntary Organisations and other organisations gave evidence that they were not satisfied with that, and the right hon. Member for Darlington (Mr. Milburn) said effectively on Second Reading that he was not satisfied with it. He said that

“‘proportionate’ appears in the measure. However, ‘fairly’ and ‘reasonably’ do not.”

He thought that one out of three was not bad; I think that he was being generous. However, I suppose that getting one out of three votes in a general election that one wins is not bad. He went on to say that

“given the genuine concerns that were expressed in another place and the continuing need to reassure especially the smaller charities that they will not face some sort of Big Brother Charity Commission with extensive new powers at its disposal, I hope that my right hon. and hon. Friends might be able to go a little further.” —[Official Report, 26 June 2006; Vol. 448, c. 49.]

With that in mind, I tabled amendment No. 9. I thought that it would be right to give the Minister the opportunity to satisfy his right hon. Friend by accepting the amendment.

Ed Miliband (Labour, Doncaster North)

Through you.

Andrew Turner (Conservative, Isle of Wight)

Through me, yes. I am sure that that would be just as good as tabling it himself.

Other organisations, such as the Association for Charities, have emphasised small charities’ need for reassurance because of the additional powers and responsibilities that the Bill will give the commission. They point to the strength of feeling expressed across the political spectrum in another place for the inclusion of such a measure as mine, and they think that it is appropriate to introduce one.

I shall refer directly to what happened in another place. Lord Phillips of Sudbury said that it was

“probably the most important recommendation which the Government declined to accept.”—[Official Report, House of Lords, 23 February 2005; Vol. 669, c. 298.]

My noble Friend Lord Swinfen and Lady Howe of Idlicote queried the provision’s omission of the words “fairly” and “reasonably”. The Minister, Lord Bassam, said:

“We are clear that this qualifier means that the commission must have regard to these principles”.

He assured Lord Phillips that the words “fairly” and “reasonably”

“add nothing to the legal duties which the commission is already under. We have no doubt that the commission is under a duty in administrative law to use its powers reasonably.”—[Official Report, House of Lords, 12 October 2005; Vol. 674, c. 334-5.]

However, that was not the view of the High Court judge in the Little Gidding case to which the hon. Member for Cheltenham (Martin Horwood) referred, because the judge said that he would not take into account whether the commission had acted fairly and reasonably. The Minister shakes his head. Perhaps he has further information about the decision-making process in the Little Gidding case.

It is the contention of the Association for Charities, with which I see no reason to disagree, that had the Charities Act 1993, or indeed any other legislation, placed that duty on the commission, the judge would have been obliged to take it into account. That is why I move the amendment.

Amendment No. 10 covers a different area. The commission, in performing its function, should distinguish between its regulatory role, advisory role and investigatory and remedial role. The latter is sometimes called its policing role—indeed, its policing and judge and jury role. By proposing the amendment, I merely follow the precedent set by the Lord Chancellor in the reforms that he has initiated in another place. Clearly, there is, or there has been, a great deal of confusion about the activities of the commission in those different areas. The strategy unit said that

“the blurring of boundaries between the Commission’s advisory and regulatory roles continues to cause confusion among charities and other key stakeholders.”

It went on to say:

“Nor does the Commission have the resources to sustain an advisory capacity as extensive as the statutory phrasing...suggests. It should retain an advisory role, but this should be more precisely defined.”

Clause 20 of the draft Bill went in exactly the opposite direction. It allowed the commission to give advice not only to trustees but to any employees of a charity, and even unsolicited. Like any good quango, that is what it is doing. However, the consequence, according to a large number of—

Peter Bottomley (Conservative, Worthing West)

For clarity, are we referring to clause 20 of the present Bill?

Andrew Turner (Conservative, Isle of Wight)

No, we are referring to clause 20 of the draft Bill, and I am sorry to say that I do not know which clause it is in the current Bill. I do not suppose that it is far from clause 20, however.

The Joint Committee wrote:

“Charities—particularly small charities—were unclear whether they were being advised to do something by the Commission or directed. The result was that, to be on the safe side, they treated advice as if it was direction. This was significantly eroding the autonomy of the sector and increasing the degree of regulation.”

The NCVO, quoted in the Joint Committee’s report, weighed in in support, saying that

“we would not want to see spontaneous, citizen-led activity stifled by a regulatory regime which actually, when it gave advice, implied that you could or could not do certain things which had the force of statute when it did not”.

The Association of Charitable Foundations is also quoted. It feared that the powers in the Bill might

“end up blurring the boundaries between the Charity Commission’s advisory and regulatory roles even more than to date”.

There was then a discussion about whether the responsibilities should be separated either by taking the advisory role outside the commission, or by retaining it within the commission and separated by a Chinese wall. After some considerable intellectual and consultative argy-bargy, which is covered in paragraphs 201 to 205 of the report, the Joint Committee, supported by the Select Committee on Public Accounts, which found that the commission’s advice and support is generally well regarded, concluded that

“the Charity Commission should take steps to differentiate between its advisory and regulatory functions and make clear in all its communications the distinction between advice and instructions.”

The Government accepted the conclusion. It was their reason for rejecting this and similar amendments in another place. Baroness Howe nonetheless felt:

“We can see a more powerful Charity Commission emerging... To have the same body regulating with those very strong powers and advising on what must be done is dangerous.”—[Official Report, House of Lords, 10 February 2005; Vol. 669, c. GC172.]

But Baroness Scotland said that

“the Government and the Charity Commission wholeheartedly agree with the principles”—

and—

“believe that it is more appropriate to leave its implementation to management action”.—[Official Report, House of Lords, 28 June 2005; Vol. 673, c. 192.]

That course of action seems perfectly sensible. The problem is that it has not happened; the Baroness made her statement last year, yet the letter to me about the performance of the Charity Commission in respect of that small charity after a visit in August last year, after the Baroness made that commitment, shows exactly that confusion between regulation and policing. I quote:

“The trustees of the charity were advised that they must review their procedure for the award of such gifts, to ensure that they fulfil a charitable purpose and in particular to consider introducing standard criteria...The advice which we gave was that, without making an assessment of need, they could not ensure that the giving of gifts was achieving the object of the charity”.

That is exactly the confusing message that my amendment seeks to clarify. I thought that the promise was to make things clear; having “advice”, “ensure”, “must” and so on in the same sentence does not do so. If it really was advice, the trustees would have been told that they “should” review their procedure for the award of such gifts. It is simple to get the issue right, but the commission did not do so, even after all those assurances, promises and recommendations.

Peter Bottomley (Conservative, Worthing West)

I shall speak briefly. It might be helpful and save time if the Minister hears from my hon. Friend and me at the same time.

My hon. Friend has opened up an interesting area. The relevant clause is clause 24—“Power to give advice and guidance”—although the issue may turn up elsewhere as well. The advice referred to is with a capital A, because it relies on an application from a

“charity trustee or a trustee for a charity”,

although I am not sure about the difference between the two. The clause goes on to say that if that advice were relied on, the trustee would not be open to a fault being found with their behaviour as long as the Charity Commission had the relevant information. I have summed that up reasonably well.

That advice is different from the ordinary advice with a small “a” given by the Charity Commission; I hope that that will not be interfered with. If the Charity Commission feels that it can say in any communication, “You must do this because it is a regulation and we require it”, or, “This is our advice and you must have a pretty good reason to do other than take it”—I leave aside the commission’s investigatory or remedial role—there will be a clear division in respect of what it can do.

Clause 25 is entitled “Power to determine membership of charity”. Will the Minister, now or later, clarify whether determining membership of a charity means to end membership, or whether someone can be a member if they have been disqualified from the charity itself? The word “determine” has a number of meanings, and it would be interesting to know which one it bears in this case.

I hope that my final point will mean that it will not be necessary to have a clause stand part debate. Will the Minister clarify something, preferably soon? If the Charity Commission, by regulation or by giving advice, said that an organisation that had been a charity was no longer to be one under the provisions of the Bill, and if that organisation did not bring itself into compliance with the new definition of “charity”, would that organisation’s assets have to be passed to another charity, or could they stay with the organisation in its non-charitable status?

Ed Miliband (Labour, Doncaster North)

It is nice to see you back in the Chair, Mr. Gale.

The debate has been entertaining and interesting and the amendments cover a range of issues. I start with amendment No. 67, which stands in the name of the hon. Member for Cheltenham (Martin Horwood). I remind the Committee that the amendment is essentially about the need to take account of beneficiaries’ and users’ interests in the performance of the commission’s functions.

The amendment—dare I say it—follows the Cheltenham principle. The sentiment behind it is perfectly reasonable, but the Government consider it unnecessary because it will not add to the existing law. The current law is set out in the Charities Act 1993, which describes the relationship between what the commission does and its impact on beneficiaries. The Act states that

“It shall be the general object of the Commissioners so to act in the case of any charity...as best to promote and make effective the work of the charity in meeting the needs designated by its trusts”.

The phrase

“the needs designated by its trusts”

means the needs of the beneficiaries.

In addition, the Bill itself sets outs the interests of the beneficiaries. The fourth objective requires the commission to promote the effective use of charitable resources, which will result in charities being able to help their beneficiaries in the most effective way, and the fifth objective requires the commission to enhance the accountability of charities to beneficiaries. If the amendment is about the need to have regard to the interests of beneficiaries, we believe that the Bill already does so.

There is also a difficulty with the amendment in that it would require the commission to act in a way that

“maximises the benefit to...beneficiaries”.

That would take the commission into an area of decision making that is properly a matter for trustees, because decisions about how a charity carries out its purposes—how it operates its activities and how it identifies beneficiaries and seeks to meet their needs—are part of administration, not a role for the commission. Proposed new section 1E of the 1993 Act, as inserted by the clause, is clear on that. It states that:

“nothing in this Act authorises the Commission...to exercise functions corresponding to those of a charity trustee in relation to a charity, or...otherwise to be directly involved in the administration of a charity.”

If the intention of the amendment is that regard is be had to beneficiaries’ interests, we think that the amendment is unnecessary, because that requirement is already set out in the 1993 Act and is supplemented by the Bill. Maximisation goes beyond the responsibilities of the commission.

Martin Horwood (Liberal Democrat, Cheltenham)

On the commission’s carrying out of the roles of trustees, I think that the Minister is slightly misled by the legislation. Although the commission itself never performs precisely that role, it certainly appoints people to such roles—in the form of receivers and managers. That has been the crux of many of the cases presented by the Association for Charities. The exercise of powers equivalent to those of trustees is clearly a consequence of the commission’s actions. There are many consequences. If great legal expertise is required to determine what the current law is, it is desirable and necessary to amend the Bill to remove the doubt and make the law more accessible to those who administer charities.

Ed Miliband (Labour, Doncaster North)

The problem is with the word “maximisation” or “maximises.” The hon. Gentleman is right that it is in the commission’s power to appoint receiver managers to run charities that have run into trouble, but the commission does not prescribe the balance between the different interests that charities might have. [Interruption.] The hon. Gentleman is asking, from a sedentary position, where the amendment says “maximisation”. It states

“So far as is reasonably practicable the Commission must, in performing its functions, act in a way which maximises the benefit to the users and beneficiaries of charities’ services and activities.”

I hope that that satisfies him and I hope that he will withdraw his amendment.

That brings me to the amendments standing in the names of the hon. Member for Cheltenham and the hon. Member for Isle of Wight (Mr. Turner) on fairness and reasonableness. It is important to be clear on those issues. Let me start with the case that has already been mentioned—the Little Gidding Trust case. My understanding reflects what Lord Bassam said in another place. Lord Bassam was correct. There was agreement between the Attorney-General and the judge in the case to set aside the question of reasonableness so that the specific merits of the case could be considered and a judgment made on its merits. It is not that the judge said that reasonableness was not something that he should consider; there was simply an agreement to set aside the question of reasonableness to shorten the time that the case would take so that specific consideration could be given to the case’s merits. That was what was done and the judgment was made.

We can be certain that all public bodies are under an obligation to show fairness and reasonableness—the basis of the Government’s argument that the amendment is unnecessary—because of a principle: not the Cheltenham principle, but the Wednesbury principle. The Wednesbury principle, which dates from 1948, states that public bodies are required to be reasonable in the decisions that they make. It is the criteria used by the court when a judicial review case is taken to it—it is the basis on which public bodies are taken to judicial review. For the benefit of Committee Members, the Wednesbury principle of unreasonableness is used to determine whether the decision taken was one that no reasonable person could have come to.

Without question, therefore, reasonableness is in the body of law and is an obligation on public bodies. As for why it should not be included in the Bill when doing so would make everyone feel happy and meet the Cheltenham principle, there is a good reason for that, which is—

Peter Bottomley (Conservative, Worthing West)

You do not want to.

Ed Miliband (Labour, Doncaster North)

Which is that we do not want to. [Laughter.] That is one of the good reasons. The other, even better, reason is that if we put it in the Bill in this case, it would send a signal to the courts that where the demand for fairness and reasonableness is not in the legislation, there is an implication of a lower standard for other public bodies. For every public bodythat exists, we would have to put fairness and reasonableness requirements in every piece of legislation concerned with that public body. I do not think that the Committee would consider that a good use of time.

I happen to have experience of that. I sat next to my colleague, the other Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Wolverhampton, South-East (Mr. McFadden), when he took the Legislative and Regulatory Reform Bill through the House of Commons. Again, there was a request to put reasonableness into the Bill, and the same debate arose.

I am in favour of fairness and reasonableness, which are important. To reassure hon. Members so that they have no sleepless nights thinking about whether the commission is under a duty of fairness and reasonableness, I will make one more comment. The commission’s strategy and review document, “Charity working at the heart of society”, states:

“any actions we take will be proportionate, fair and reasonable”

It is clear that the commission recognises that it is under that obligation. It is a duty on all public bodies. I hope that the amendment will be withdrawn.

Andrew Turner (Conservative, Isle of Wight)

I was about to say that the Minister dealt jolly well with “reasonably” but what about “fairly”? We have not heard much about that.

The commitment from the Charity Commission goes some way toward meeting my concern, but is the failure to fulfil that commitment something on which an appeal can be made to the tribunal, a complaint can be made to the independent complaints reviewer, or the commission can, in due course, be taken to the parliamentary ombudsman?

Ed Miliband (Labour, Doncaster North)

I am pleased that the hon. Gentleman asks me that question, and I am happy to respond. The Bill refers to the fact that the criteria for the tribunal considering a case is similar to that used for judicial review in the courts. Reasonableness is therefore clearly applicable. As soon as I find the reference, I shall furnish the hon. Gentleman with the details. I hope that I have dealt with fairness and reasonableness. The fact that the commission mentioned it in its document creates an onus on it to act reasonably, which is something that the courts can take into account.

Amendment No. 10 covers the commission’s regulatory, advisory and investigatory roles. We are again sympathetic to the motivations behind the amendment. The Joint Committee recommended that the commission should take steps to differentiate advisory and regulatory functions. The Government endorsed that recommendation. The commission accepted it and has embarked on a review of its operations. As I understand it, the commission is already putting the recommendation into practice. To take the example of recently published guidance, the commission has begun to rewrite all its guidance in clearer language that helps to differentiate those passages that describe what is required of trustees by law and those that set out what is expected of them as a matter of good practice.

The guidance will explain that, when the word “must” is used, it shows a specific legal or regulatory requirement affecting trustees or a charity and trustees must comply with that requirement. Sections that contain a legal or regulatory requirement are clearly identified. When “should” is used, it indicates items that are regarded by the commissioners as minimum good practice, but for which there is no specific legal requirement. Trustees are advised that they should follow the good practice guidance unless there is a good reason not to do so.

In the Better Regulation Task Force report, “Better Regulation for Civil Society”, it was acknowledged that the commission had made

“an important move towards greater clarity with the publication of their new guide for trustees, which separates legally binding obligations on trustees from guidance on how they should fulfil their role.”

The report makes a further recommendation about extending that approach to all its written advice to charities, and the commission fully intends to take that work forward.

Although we agree with the sentiments behind the amendment, it attempts to draw a distinction between the different functions of the commission. The truth is that the regulatory role can encompass a range of activities, including investigation and the giving of remedial advice. Let us consider what the hon. Member for Worthing, West (Peter Bottomley) said earlier about the commission giving advice to organisations to help bring themselves back within the framework of regulation of charity law and public benefit. In the performance of the commission’s functions it is hard to draw the very clear distinction between its different duties that the hon. Gentleman seeks.

We are sympathetic to the sentiments behind the amendment. The commission has started to respond to the Joint Committee and intends to go significantly further. However, putting such a provision in the Bill in the way in which the hon. Member for Isle of Wight proposes is sensible.

Andrew Turner (Conservative, Isle of Wight)

I am grateful to the Minister for what he has said. I take it that failure to comply with the obligations will be “tribunalisable.” There must be a clear understanding that advice is advice and that failure to take advice is not in itself an offence. The consequence of failing to take advice may be an offence and the consequence of failure to observe guidance may be an offence—I use the word in a broad sense—but just because someone does not want to do what the Charity Commission advises is not a reason for it to come down with a heavy hand.

Ed Miliband (Labour, Doncaster North)

I share the hon. Gentleman’s sentiments; he used the phrase “heavy hand”, and I was about to use the same phrase. There should be no excuse or alibi for heavy-handed behaviour towards those who do not follow the commission’s advice; I agree with him on that. Those are presumably some of the steps that the Joint Committee encouraged the Charity Commission to take, and which it seems happy to take.

We recognise the sentiment behind amendmentNo. 76, but I found the remarks made by the hon. Member for Cheltenham, in defending his amendment, slightly odd. If I may say so, he is confusing the Charity Commission’s role as regulator with some other role that it might play. He cited the example of organisations that are dominated by those in twin sets and pearls. I am sure that we can think of some political parties that, certainly until recently, had that reputation—indeed, in some of our minds, they still do. None of us would propose that the Electoral Commission should have responsibility for intervening in the activities of such an organisation and ensuring that the twin set and pearls brigade opened itself up to much greater diversity; that is a matter for the organisation. I make a similar point in relation to the hon. Gentleman’s speech, in which he identified precisely that sort of characteristic in certain charities.

Having said that, the substance of the hon. Gentleman’s amendment is actually slightly different to what he said in his speech. He talked about new and developing charities in a diverse range of communities. We are sympathetic to that, but we do not think that that needs to be in the Bill. Let me say something briefly about what the commission is doing in that respect. It has developed contacts with a broad range of communities, especially those brought together by a shared ethnic background or faith. It has a network of 65 organisations from across the sector, created with targeted recruitment in Asian, Afro-Caribbean, Jewish and Muslim communities, which reflects the sector’s diversity, income and location. The commission provides advice in other languages and provides a translation service for customers. Also, it is listening, through a particular project, to faith-based charities and has hosted seminars in Hindu and Muslim communities.

It is also worth saying that the Race Relations (Amendment) Act 2000 obliges public authorities such as the commission to promote racial equality in the way that they act towards their staff, develop policies and improve their services. The commission must produce a race equality scheme, setting out its action plans with meaningful and measurable targets. It must produce a similar scheme for disability and, as set out in the Equality Act 2006, gender equality. Whatever the Charity Bill says, as a public authority, the commission will have responsibilities imposed on it through other pieces of equality legislation.

Martin Horwood (Liberal Democrat, Cheltenham)

I am somewhat reassured by what the Minister says, and especially by his reference to other legislation, but he is wrong to say that the amendment pushes the commission beyond its remit. Its remit is not the same as that of the Electoral Commission, which is a purely regulatory body. Among the general functions of the commission, No. 6 is “Giving information or advice”. The first of its objectives is the public confidence objective, which is

“to increase public trust and confidence”.

That clearly takes the commission into the area of giving encouragement and advice, and trying to develop the sector beyond providing simple regulation—a point eloquently made by the hon. Member for Isle of Wight.

Ed Miliband (Labour, Doncaster North)

That is why I distinguish between the hon. Gentleman’s speech supporting his amendment and his amendment itself. I actually agree with him about his amendment, but in his speech, he somehow gave the impression that it was the Charity Commission’s job to ensure diversity within particular organisations and to break up the twin set and pearls brigade; I wanted to correct that, because I just do not think that that is the commission’s job. It is true that it has functions that go beyond those of the Electoral Commission. As I said, it is fulfilling its functions well in relation to diversity—indeed, it is under an obligation to do so—but it is not the commission’s job to tamper with the existing structure of organisations. The hon. Gentleman’s amendment does not suggest that it is, but I thought—I may be wrong—that he implied that in his speech. On that basis, I hope that the hon. Gentleman will withdraw his amendment.

Peter Bottomley (Conservative, Worthing West)

The Minister has not explained why he is willing to have innovation written into the Bill, but not what the hon. Member for Cheltenham suggested. Perhaps we will leave it on one side for those people who want to read the words. Does the Minister have a note, or will he say a word about my last point?

Ed Miliband (Labour, Doncaster North)

I beg your pardon, Mr. Gale. I should have responded to the hon. Gentleman’s point. It is an important point for the Committee to register.

The process of becoming a charity is a one-way street. I would not say that there is no going back, but it is hard to go back. We are dealing with two situations. First, a charity or an organisation is institutionally incapable for some reason or other of fulfilling the test of a charity. Secondly, it does not for whatever reason comply with the requirements of a charity. In the second case, it is the commission’s job to work with the charity to ensure that it can return to meeting the tests of charitable status.

When a charitable trust ceases to be charitable and it cannot institutionally become charitable, it is then for the commission to alter the trust’s purposes by scheme in accordance with the cy-près rule, which we will come to, so that the new purposes on which the assets are held continue to be charitable. Again, the issue is about a return to charitable status, but it may require more extreme or draconian action.

As I understand the situation from talking to the Charity Commission, there are very few if any recent examples of cases in which it has not been possible to conduct that process co-operatively. We should not give the impression that the commission seizes assets in dawn raids; the process is undertaken co-operatively. Sometimes, the situation will simply be that the original purposes for which the charity was set up have been fulfilled, but assets remain and they need to be transferred to another purpose. The commission will work with the trustees to do so. I hope that answers the hon. Gentleman’s point.

Peter Bottomley (Conservative, Worthing West)

We should leave it like that for the time being. We can accept that when it is possible to return a charity to compliance, and when a charity’s purpose can be modified so that the assets can be used for something charitable, there is no problem. The problem occurs with a change, perhaps following a change in the law as we propose, when purposes that are presumed to be charitable now are no longer charitable, but people want to continue, and assets have been given to them for the original charitable purpose. That worries me, and if the Minister does not have a straightforward answer, he might wish to return to the issue on Report.

Ed Miliband (Labour, Doncaster North)

I am not convinced that there is a straightforward answer. However, with respect, I should like to correct the hon. Gentleman. All purposes that are charitable now will remain so after the passage of the Bill. That is an important part of the Bill. The 12 purposes set out in clause 2 and the 13th catch-all category cover all existing charitable purposes. The scenario he envisages will not arise.

Helen Goodman (Labour, Bishop Auckland)

I had thought that this issue would come up later when we considered the clauses on endowment funds and changing the purposes for which property had originally been given. However, the type of incident described by the hon. Member for Worthing, West might be understood more clearly with the following example. I remember an occasion when funds were given for the sons of cobblers in Leicestershire. Particular monies were given for that purpose, but now of course, there are not many sons of cobblers in Leicestershire and they are no more needy than any other group in the community. That is the kind of problem to which the hon. Gentleman refers.

Ed Miliband (Labour, Doncaster North)

I am grateful to my hon. Friend—she raises an important point. I gather that there has been an issue on almshouses, which were originally set up to house destitute people. In certain cases the Charity Commission has worked with almshouses in order to vary their purposes through cy-près, so that they remain charitable but can also use their assets to the full. I suspect that the same practice would arise in relation to the cobblers. We shall reach the clauses on cy-près later, if we ever make progress. They allow charities to vary their purposes and they are directly about this issue.

Andrew Turner (Conservative, Isle of Wight)

It might be more appropriate to address the issue that I wish to mention when we come to the cy-près provisions, but the Minister may be able to obtain some information in advance. I understand that learning the use of weaponry used to be a charitable purpose, because it was felt to be beneficial to the defence of the country, which was itself charitable. There were charitable shooting clubs. Will the Minister tell us what happened to the assets of such shooting clubs when the commission decided that that activity was no longer charitable?

Roger Gale (Conservative, North Thanet)

Order. I am going to make two points which I hope I shall not have to make again. The first is that interventions are becoming longer and longer and longer. There is a case for a slightly longer intervention if it saves an even longer speech later, but interventions should be just that. Secondly, will hon. Members please stick to the amendments under discussion.

Ed Miliband (Labour, Doncaster North)

Thank you, Mr. Gale. What were the amendments? The answer to the hon. Gentleman’s question was that it was concluded that there had been a mistake in the original licensing of such clubs, and therefore that particular class of clubs has been allowed to keep its assets. To be fair to the Charity Commission—it would seem that I am its champion in the Committee—it showed a flexible, reasonable approach in concluding that there has been an oversight in the original licensing practices, so that the clubs were able to keep their assets. With that I conclude.

Martin Horwood (Liberal Democrat, Cheltenham)

I thank the Minister for many of his comments on the three amendments that have been tabled in my name. On amendment No. 76, I am reassured by the Minister’s statements and I beg leave to withdraw it. On amendments Nos. 67 and 103, I still believe that there is a pretty fundamental principle at stake. The Minister seemed to object to the use of the word “maximises” in amendment No. 67, on the ground that it would elevate one group of stakeholders over the interests of others. In the context of charities, however, it seems to me that it is quite right to elevate the rights of a particular group of stakeholders, because charities exist for the very purpose of benefiting their beneficiaries. I appreciate, however, that there might be a technical legal difficulty with the amendment and I am content to withdraw it.

That criticism does not apply to amendment No. 103. That amendment simply repeats the injunction to act fairly and reasonably and requires the commission to have regard to the interests of charity beneficiaries. The legal technical argument that the Minister made against amendment No. 67 does not apply to amendment No. 103. He made a defence against the inclusion of the words “fairly and reasonably”—or at least of “reasonably”—and referred to the Little Gidding trust case, in which the judge was able to set aside consideration of the reasonableness of the commission’s actions in order to consider the merits of the case. That judgment might have been reasonable in that particular case, but the mere possibility that a judge could set aside reasonableness in that way concerns me.

The Minister quoted the commission’s documents in defence of its intention to act reasonably, but we have seen that there is considerable disquiet in certain parts of the sector about whether the commission always acts reasonably in practice. It is one thing to say, “This exists particularly in statute if you follow the legal trail through various pieces of legislation,” but it is quite another to be able simply to refer to the aims and objectives of the regulatory body and say that a clear and transparent obligation set down in statute instructs the commission to act fairly, reasonably and with regard to the interests of charity beneficiaries.

It seems to me that those things are eminently reasonable and obviously in the interests of the charity’s beneficiaries, who are the principal stakeholders and should be the people whose interests the whole framework exists to benefit. It would be reasonable to put the measures into the Bill, and I shall not withdraw amendment No. 103. I beg leave to move it.

Roger Gale (Conservative, North Thanet)

Order. It does not work like that. Let me explain to the Committee, for everybody’s benefit, that when you debate a group of amendments, you move only the lead amendment. None of the other amendments has yet been moved, nor would they normally be. If any Member wishes to move an amendment that is grouped and is not the lead amendment, they are required to give notice to the Chair in advance. The Chair will then decide whether he or she will accept that motion.

The hon. Gentleman is clearly unaware of that, so if he seeks leave to withdraw amendment No. 67, exceptionally, I will then call amendment No. 103 formally, but it will be the last time that I do so.

Martin Horwood (Liberal Democrat, Cheltenham)

Thank you very much for your indulgence of my inexperience, Mr. Gale. I beg to ask leave to withdraw the amendment.

Roger Gale (Conservative, North Thanet)

It will not surprise the Committee to know that I have already decided that we shall not debate clause stand part. If anyone has anything to say, they had better say it, with one caveat—they had better say it in order; otherwise I shall stop them.

Andrew Turner (Conservative, Isle of Wight)

I beg to move amendment No. 12, in clause 7, page 7, line 43, at end add—

‘(5) The Commission has power to award compensation when a complaint is upheld against its actions.”.’.

I shall refer briefly to amendments Nos. 14 and 16, which would give the tribunal the same powers.

The Charity Commission has its own complaints procedure and the tribunal, which we will discuss later, will be only a process for determining legal challenges to the activities of the commission. It will not be a place for determining whether the commission has mistakenly gone down the wrong road, has been guilty of maladministration or has handled things in an unfortunate manner. Those decisions will remain within the remit of the commission and its independent complaints reviewer and, in due course, of the parliamentary ombudsman.

My noble Friend, Lord Swinfen proposed in another place to set the independent complaints reviewer on a statutory footing. He said that that would create

“a truly independent mechanism for charities, trustees andothers to challenge the Charity Commission when it is apparently guilty of maladministration or acting unfairly, unreasonably and disproportionately”—[Official Report, House of Lords, 12 October 2005; Vol. 674, c. 379.].

He supported that assertion by pointing out that the independent complaints reviewer is forbidden to recommend to the commission the payment of compensation. The independent complaints reviewer can, I understand, recommend the making of a consolatory payment—that is, a payment for distress or possibly for inconvenience caused by the commission’s conduct. I am told, however, that the reviewer cannot make awards of compensation for financial loss. The amendment would permit it to do so.

The amendment fits into the larger picture in that a number of cases go to the ombudsman from time to time, and the ombudsman must consider whether the respondent, which is the commission, has acted—I suppose one might say—even fairly reasonably within its terms of reference. However, in cases in which the commission is not entitled to make a payment of compensation, it cannot consider making such a payment, so it is not possible to take the commission to the parliamentary ombudsman when it makes no such payment—although it can be taken to the ombudsman for failure to make a consolatory payment.

I am concerned that the absence of power to pay compensation filters through to the ombudsman. The ombudsman can require compensation when maladministration has been demonstrated, but injustice does not always follow maladministration. Sometimes it does, and sometimes it does not, but the ombudsman can require compensation only when there is a finding of maladministration. Anyway, why should one have to go to the ombudsman for compensation? It might be that the commission would admit that there had been maladministration, but would not admit—because it is not entitled to do so—to an obligation to pay compensation. It would be perverse if one had to go to the ombudsman to say, “Well, the commission admits maladministration, but only you can award us compensation.” That is why I tabled the amendment.

Martin Horwood (Liberal Democrat, Cheltenham)

I think that the amendment comprehensively fails the Cheltenham principle in that, although it might express a desirable objective of some sort, it does not seem to me to be necessary or necessarily harmless. It puzzles me on three counts. First, there seem to be a lot of other bodies, quite apart from the ombudsman, who could more appropriately award compensation if complaints were upheld against the Charity Commission than the commission itself. The Bill provides for the charity tribunal, and there is also the independent complaints reviewer and the courts. Secondly, it would be a uniquely charitable act to award compensation against oneself, as in effect the amendment would require the commission to do.

On a more serious level, there is an obvious risk of conflict of interest that would offer a field day for lawyers who might wish subsequently to challenge a compensation award. Finally, it is a bit odd for a regulator to award compensation. I am not sure what the precedents are for that. I know that Ofwat can fine water companies, although it seems extraordinarily reluctant to do so most of the time, but the idea that it can pay them is not a precedent that I would want to set. The amendment is rather mistaken.

Tom Levitt (Labour, High Peak)

The hon. Gentleman and I can find a common cause on the amendment. Did he also note that the hon. Member for Isle of Wight rightly said that compensatory payments were likely to be more than consolatory payments had been in the past? The proposal seems to be an uncosted commitment by the Conservative party. Is not making uncosted commitments normally the role of the Liberal Democrats?

Martin Horwood (Liberal Democrat, Cheltenham)

The hon. Gentleman caught me to make a political point just before I sat down.

Peter Bottomley (Conservative, Worthing West)

The argument can go further than the case made by my hon. Friend the Member for Isle of Wight. Let us remember the Thomas Coram Foundation, which was given many valuable objects by its creators. It became, in effect, a museum as well as a child care and family support organisation. The trustees wanted to separate off the art and, all bar one of them, came to an agreement. The Charity Commission agreed with the majority of the trustees and the dissenting trustee then went to the Law Officers and a Law Officer interfered. I think that it was the Solicitor-General , although I am open to correction.

It is difficult to imagine that a Law Officer would get something wrong or unnecessarily cause expense to people in respect of the power of consolatory payment or compensation payment, but would the Government feel able to make a payment of either compensation to put the trustees back to where they were in respect of the costs to which they were put? The Minister might want to mull over that with his advisers.

Ed Miliband (Labour, Doncaster North)

The hon. Member for Worthing, West always seems to ask a difficult question just before I am about to stand up. I shall consider it further. It does not sound like a good idea, but I shall find more justification for why that is so.

The commission already has the power in common with other Departments to pay compensation for losses suffered by members of the public or organisations as a result of maladministration in its work. As members of the Committee have said, the public or organisations can pursue complaints about maladministration through the commission’s internal complaints procedure, the independent complaint reviewer and the parliamentary ombudsman. As the hon. Member for Isle of Wight said, the independent complaint reviewer has the power to recommend a consolatory payment in recognition of the anxiety and distress caused by maladministration. It is worth saying that the commission has never yet refused a recommendation from the ICR to make a consolatory payment.

Complainants are not required to use the ICR service and can seek referral to the parliamentary ombudsman. There are no restrictions on the ombudsman in terms of recommending compensation for actual financial loss, save that she would have to be satisfied that a quantified loss resulted from maladministration on the commission’s part. Overall, the amendment would not be necessary. Guidelines and the powers already exist for the commission to take such action and there are a set of established complaint mechanisms under clause 8 to make it happen. I hope, on that basis, that the hon. Gentleman will withdraw the amendment.

Andrew Turner (Conservative, Isle of Wight)

The Parliamentary Secretary has given a clear assurance that the commission has the power to pay compensation. That was not my understanding and, on the basis of that assurance, I beg to ask leave to withdraw the amendment.

Clause 8

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move amendment No. 85, in page 8, line 16, leave out second ‘of’ and insert

‘made or not made by’.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following amendments: No. 86, page 8, line 17, at end insert—

‘(ab) such appeals and applications as may be made in relation to any decision or activity consequent to any decisions, orders or directions of the Commission, and’.

No. 69, page 8, line 20, at end insert—

‘(c) such appeals and applications as may be made to the Tribunal, in respect of decisions, orders or direction not made by the Commission which could reasonably have been made by the Commission.’.

No. 87, page 8, line 20, at end insert—

‘(d) any appeal or application as may be made to the Tribunal relating to any decision made by the Secretary of State under this Act.’.

No. 19, in schedule 4, page 91, line 13, leave out from ‘matter’ to end of line 29 and insert—

‘as set out in paragraph 3, an appeal may be brought to the Tribunal against any decision, direction or order made or given by the Commission under this Act (including any decision not to give a direction, make an order or otherwise act under this Act).

(2) Such an appeal may be brought by—

(a) the Attorney General;

(b) any person from the following—

(i) the persons who are or claim to be the charity trustees of the institution or who otherwise have control or management of the institution,

(ii) (if a body corporate) the institution itself, and

(iii) any other person who is or may be affected by the decision, direction or order (as the case may be).

(3) In determining such an appeal the Tribunal—

(a) shall consider afresh the decision, direction or order appealed against, and

(b) may taken into account evidence which was not available to the Commission.

(4) The Tribunal may—

(a) dismiss the appeal; or

(b) if it allows the appeal, exercise any of the following powers—

(i) quash the decision, direction or order (as the case may be) in whole or in part, and (if appropriate) remit the matter to the Commission,

(ii) substitute for all or part of the decision, direction or order (as the case may be) such other decision, direction or order as could have been made or given by the Commission,

(iii) give such direction to the Commission as it shall consider appropriate,

(iv) substitute for all or part of any direction or order any other direction or order which could have been made by the Commission, and

(v) add to the decision, direction, or order (as the case may be) anything which could have been contained in the original decision, direction or order.’.

Before we proceed, I have another little note on procedure. If the hon. Gentleman wishes to move any other amendments than the lead one, he will need to give me advance notice so that I would be able to say no courteously. If the hon. Gentleman leading for the Opposition had wished to move amendment No. 19, he, in turn, would need to give notice, but it would not be called now. It would be called formally when the schedule to the Bill to which it refers is reached much later in the proceedings. He would still need to give notice to the Chair of his intention now. I hope that is clear. We will now discuss amendment No. 85.

Martin Horwood (Liberal Democrat, Cheltenham)

I am extremely grateful to you,Mr. Gale, not least for the instructive and tolerant way in which you are guiding us through this minefield. You are obviously acting in an advisory, rather than a regulatory, capacity in that.

My proposed amendment No. 85 is designed to raise a matter that I raised on Second Reading. That is about the ability of decisions effectively not made by the commission to be referred to a body, such as the tribunal, as well as those decisions that are made. As a general principle, it addresses the question of whether or not commission inaction, as well as commission action, may have consequences.

The case that I raised on Second Reading was that of an Alzheimer’s organisation or an organisation that purported to support Alzheimer’s research, which was called the Alzheimer’s Foundation. Appropriate and speedy action was taken by the advertising standards authority and by journalists in investigating and bringing to public attention the undesirable activities of that organisation.

Unfortunately, the one body that did not see fit to act until political pressure was brought on it, was the Charity Commission. That would have been an occasion when, instead of troubling Ministers with the matter or having to raise it through the media, it would have been worthwhile, appropriate and convenient for the Alzheimer’s Society—which was the legitimate and worthwhile charity that was threatened by the activities of that organisation—to have immediately referred the commission’s decision not to act to the tribunal.

From my reading of the schedule that sets out the various circumstances in which decisions and, in some cases, decisions not to act can be referred to the tribunal, it would not have been possible to do that under the Bill. I hope that we will see our way to include that in the Bill.

Amendment No.86 is different. It addresses many of the matters raised in the Association for Charities’ document “Power without Accountability”. The amendment refers not only to decisions made but to

“any decision or activity consequent to any decisions, orders or directions of the Commission”

Peter Bottomley (Conservative, Worthing West)

Just for clarity, we were looking at the reference to schedule 1D. Is that what appears on page 102 as part of schedule 4? If it is not, I am looking in the wrong place. I think that it is, but it would be useful if that could be confirmed.

Martin Horwood (Liberal Democrat, Cheltenham)

That is a good question. I am beginning to sympathise with the Minister about being asked intelligent questions by the hon. Member for Worthing, West. Schedule 1D gives the detailed table of decisions which can be referred to the tribunal. Later on, I am proposing amendments Nos. 81 and 82 to that very schedule in order to produce new possibilities for referring specific decisions or activities to the tribunal.

What I was seeking to do in those amendments to clause 8 was to confer a general responsibility and possibility on complainants to be able to refer decisions not made or activities consequent to decisions made to the tribunal as a general rule without having to be dependent on finding them in schedule 4.

Ed Miliband (Labour, Doncaster North)

I hesitate to try and help the hon. Member for Worthing, West as I might get this wrong, but I think that the relevant provision is in section 1C. The long table that we will be talking about later starts on page 94. Column 1 is essentially a list of all the different commission decisions that can be referred to the tribunal. If the hon. Gentleman is looking for a list of decisions that can be taken to the tribunal, he should look at the table.

Martin Horwood (Liberal Democrat, Cheltenham)

I am particularly grateful to the Minister for that intervention, which is exactly right.

I was discussing how it might work in practice. We will consider amendments Nos. 81 and 82 later, but I shall refer to them briefly, because they explain how it might work and how what appears to be a broad, sweeping permission to bring cases to the tribunal will actually be a very practical one—for instance, a decision to continue with the appointment of a receiver and manager on the basis that the activities of the current receiver and manager consequent on the decision to appoint another might be brought before the charity tribunal. The displaced trustees of the charity in question might feel that the receiver and manager was running up excessive costs or was not administering the charity in the best interests of its stakeholders. I cannot see in the table in schedule 4 the decision to appoint that receiver and manager in the first place. That is an example of how a general amendment might enable people to bring appropriate complaints before the tribunal.

The issues are serious for the charities concerned; they are not legal minutiae. One case in the booklet issued by the Association for Charities particularly alarmed me and illustrated the need for such amendments. PALS, or the Protection of Animal Life Society, was a small animal welfare charity established near Salisbury in 1984. It grew during 15 years to become a significant local charity, but it did something that in an ideal world it would have been advised not to; it based the charitable premises on the founder’s private land.

That attracted the interest of the Charity Commission, and a process was set in train. As far as I can tell from this document—I understand that its factual accuracy has not been significantly challenged by the commission or anyone else—no serious breach of charity law was ever found. Nevertheless, a process was instigated that led to the removal of the founder as a trustee, the freezing of the charity’s bank account and ultimately the winding up of PALS as an independent charity. The consequences were extremely serious for the charity concerned. It happened despite a petition from 1,000 local supporters of the charity and the involvement of the local MP.

The Association for Charities’ conclusion is pretty strongly worded:

“it is clear that the Commission found no substantial breaches or any intent to breach charity law or regulation. The fact is that charity law as interpreted by the Commission is so complex there can hardly be a charity in the land which does not occasionally commit minor technical breaches. The Commission could not find even a half decent excuse to destroy this charity. But it sacked the key person at the centre of PALS’ success, ‘supervised’ the appointment of incompetent replacement trustees who destroyed it, and then connived in disposing of the remnants to a big charity.”

The wording is extremely strong, and I am sure that the commission and its representatives might contest it. One might think that it is an over-excited response to an administrative issue.

On the other hand, the founder of the charity was represented by Bates, Wells and Braithwaite, which in my view is the country’s leading charity law firm. It includes such eminent and learned Friends as Lord Phillips of Sudbury. The firm wrote to the Charity Commission in September 1998 to say that the PALS case had been handled in a way that it considered

“to have been profoundly unsatisfactory.”

A few days later it wrote to the hon. Member for New Forest, West (Mr. Swayne), saying:

“Under the Charities Act 1993, the Charity Commission had an extraordinary latitude and draconian powers which...are not checked or qualified by any prescribed due procedure or meaningful accountability. This has led to heavy-handedness, unfairness and serious miscalculation on the part of the Commission in this case...We very definitely think it is a case which may be used to illustrate the need to ensure that the Commission is statutorily obliged to act in accordance with the general principles of fairness and natural justice in accordance with a prescribed and open procedure and that there is an effective, independent and affordable appeal procedure.”

In some ways, the Bill already takes account of that matter. The establishment of the charity tribunal is a welcome step. It is one of the ways that it seeks to address the general rule of having some kind of transparent court of appeal against charity commission decisions. It is one of the reasons that we support the Bill in general. Nevertheless, that particular case would not have been easy to refer to the tribunal, unless the Bill is amended in the way that I suggest. The sense of injustice that permeates that report—and which is present in some smaller charities, some of which have been subject to Charity Commission decisions and their consequences—is something that it is in the commission’s interests to address.

If the commission were to have a proper process which resulted in consequences or the actions being challenged and gives the commission the opportunity to justify them in some way—what Bates, Wellsand Braithwaite called a “prescribed and open procedure”—that would enable them to avoid ever having to be presented with a document like this ever again. They would have that open and prescribed procedure and would be able to justify and hopefully be almost acquitted by the tribunal, if they were acting in the right. I am therefore keen to promote amendment No.86 for that reason.

Amendment No. 69 repeats the principle of amendment No. 85. Therefore, I will not spend a great deal of time on it. However, the significant phrase within it is:

“decisions, orders or directions not made by the Commission which could reasonably have been made by the Commission.”

Amendment No. 87 closes what might be a loophole. I would be interested to hear the Minister’s views on that. There are large numbers of provisions in the Bill which address, or give the right of appeal against, Charity Commission decisions. However, the commission is not the only body corporate that can act under the Bill. The Secretary of State himself has powers, some of which are by order and regulation and which could presumably be challenged in this place and elsewhere. There are some powers, for example, the decision to appoint, set remuneration for and even sack, a member of the Charity Commission itself.

I cannot see anywhere in the Bill—but perhaps the Minister may enlighten me if I am wrong—where that type of decision could be challenged on any of the bases that we have discussed in the debate so far. It would be good if the Secretary of State’s decisions were also subject to the Bill’s appeal procedure and the processes of the charity tribunal. I beg leave to move the amendment in my name.

Andrew Turner (Conservative, Isle of Wight)

I strongly support the thrust of the amendments tabled by the hon. Member for Cheltenham. That is why I have tabled amendmentNo. 19, which seeks to achieve the same thing by a different route and which I give notice that I wish to move at whatever time is appropriate.

I was appalled to read the Association for Charities’ report. I cannot believe that a public body has behaved in such an irresponsible way. One that is so open to criticism and appears to adopt the most reprehensible tactics in dealing with members of the public and members who are trying to do their best—a very small group of people.

To my knowledge, and as the hon. Member for Cheltenham said, none of the report has been substantially challenged by either the Charity Commission or the Home Office. I am amazed that such behaviour has been tolerated in a public body. The hon. Gentleman quoted the letter to my hon. Friend the Member for New Forest, West. It bears repeating that the letter was not written by the Association for Charities, nor by an irritated trustee and nor by someone who went into the marketplace in Salisbury, gave money and then found that the money was being wasted by the appointees of the Charity Commission. The letter was written by a reputable firm of charity lawyers who described the commission as having extraordinary latitude and draconian powers, as having behaved with heavy handedness and unfairness, and as having made serious miscalculations.

The commission appointed trustees for the charity who came and went on an almost monthly basis. It then handed over what remained of the charity’s assets to another charity that did not appear to have identical objectives—the National Canine Defence League. That is a perfectly reputable charity that focuses on the needs of dogs, but PALS focused on the needs of a far wider range of animals. The commission tried to bully Lorraine Drake, using what seems the absolutely perverse excuse that the buildings of the charity, which were mobile buildings, were on her land. It bullied her into entering into a lease with the charity for that land—a move for which there was no legal justification.

I accept that the tribunal may have been set up as a result of such a case. However, I believe that the hon. Member for Cheltenham is absolutely right in saying that there should be a general mechanism of appeal, because the alternative is to go to the High Court—an option that the tribunal is meant to prevent. The tribunal was established because charities cannot afford to go to the High Court; charities that spend money going to the High Court are spending money that could be better spent on animals, young people, or the elderly and vulnerable, or the other beneficiaries of the charity. I strongly believe that any decision or non-decision of the charity should be appealable to the tribunal. That is why I tabled amendment No. 19.

Peter Bottomley (Conservative, Worthing West)

Just for the record, I am not going to take part in this part of the debate because my brother-in-law works for Bates, Wells and Braithwaite.

Ed Miliband (Labour, Doncaster North)

Phew. I thought that I was going to get a difficult question to which I would not know the answer. I got away with it this time.

On the Association for Charities report, I do not want to enter into the details of the case that has been mentioned. However, to set some context for the Committee, it is worth pointing out that the PALS case went to the independent complaints reviewer, which, as I understand it, did not uphold the case made by the Association for Charities. That is not to say that the document does not have its merits. I have not read it, but I shall endeavour to do so, and I am sure that it has merit, but the case is not one of a public body operating without any constraint. Indeed, the case was taken to the ICR, which found in favour of the commission.

Andrew Turner (Conservative, Isle of Wight)

It is of course a fact that the ICR has a contract with the Charity Commission to perform that service. Will the Minister say whether it is still the case, or indeed whether it was ever the case, that that contract involved an upper limit of £5,000 on compensation?

Ed Miliband (Labour, Doncaster North)

It is the hon. Gentleman’s turn to ask me questions to which I do not know the answer. To my knowledge, the contract does not involve that, but I shall endeavour to find out. I think it is unfair to the independent complaints reviewer to suggest that it is influenced by its contract with the Charity Commission to find in favour of the commission, but I can find the answer for the Committee. I suspect that there are many cases in which the independent complaints reviewer has not found in favour of the commission and it will want to protect its independence and reputation. Although the hon. Gentleman did not intend to do so, I think that he has slightly impugned the reputation of the ICR, which I suspect goes about its job diligently.

I shall deal with the amendments by first informing the Committee of the principles of our approach to the establishment of the charity tribunal. I will set out the context of the amendments and explain why we do not believe that they are sensible while, on first blush, some of them may seem to be making a reasonable case. There are three things worth saying about the new body. First, it is an appellate body in line with the accepted practices of the workings of tribunals, including employment tribunals and those covering the Land Registry. Within the rules and procedures of tribunals that are set out by the Tribunals Service, they operate in an accepted way. They are bodies to which appeal can be made if it were felt that a wrong decision had been made by a public body.

Secondly, the decisions that tribunals consider are always—and not only in the case of the proposed charity tribunal—legal, not administrative. For example, the decision whether an organisation should be charitable and whether the charity commissioners made a correct judgment is a subject for the charity tribunal. However, the slow processing of an application form and whether that was negligent is not. Members of the Committee might wonder whether the charity tribunal will have enough to do. I suggest that they look at column 1 of the table under schedule 4. The table runs to eight pages and, by my count, deals with about 50 different classes of decisions.

A wide range of legal decisions is made by the commission that the tribunal will be entitled to consider, including whether an institution is put on the register of charities, decisions that are made about trustees, inquiries into charities and, indeed— to answer the hon. Member for Cheltenham—the appointment of receiver-managers referred to on page 95 of the Bill at column 1. It is headed:

“Order made by the Commission under section 18(1) of this Act in relation to a charity”

and includes decisions made on an interim or receiver-manager basis.

Martin Horwood (Liberal Democrat, Cheltenham)

I have two brief questions for the Minister. First, he suggests that only formal legal decisions are subjected to the tribunal’s review. However, page 94 refers to a decision simply “to institute an inquiry”. That does not sound like a legal decision to me. He seems to be putting a more restrictive construction on schedule 4 than I thought was the case.

Secondly, I am aware that the decision to appoint a receiver-manager is referred to under the schedule, but we are dealing with when even the initial decision might have been reasonable. However, the consequences of the actions of the receiver-manager once appointed do not seem to be open to challenge under the Bill, as drafted. If the Parliamentary Secretary were willing to reassure me that he would make sufficient changes to the table at some stage to allow for that, I might be sympathetic.

Ed Miliband (Labour, Doncaster North)

I cannot give the hon. Gentleman reassurance on that point. The commission is operating its legal or quasi-judicial function by making decisions, such as instituting an inquiry, although that is referred to as a legal decision. Indeed, it is covered in the table and considered to be a legal decision. I cannot reassure him about the receiver-manager. He highlighted the distinction that I am trying to draw and that all tribunals follow between a legal decision and a challenge to a legal decision, which is absolutely appropriate, and questions of administration by the Charity Commission or persons that it appoints. That is not a matter for tribunals. Tribunals make a ruling on a legal decision made by a public body. That is not just true in this area; it is true in respect of Her Majesty’s Revenue and Customs, the Land Registry, which I cited, and the land tribunals, which I understand operate in the same way. However, complaints about the practice of administration of the body are for its internal complaints procedures, the independent complaints reviewer, or the parliamentary ombudsman—they are not for the tribunal.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful to the Parliamentary Secretary. However, I have said that amendments Nos. 81 and 82 give examples of how the activities I am talking about, which he has just mentioned—for example, the decision about whether to continue with the appointment—could be brought before the tribunal in a way that fits with that legal structure.

The schedule deals not just with a decision to do something, but the decision not to do something. That principle is already conceded in the schedule, so I cannot see the problem with extending it expressly to the decision to continue, for instance, with the appointment of a receiver-manager where the issue at hand, if not the legal principle, is the continuing activity being undertaken by that receiver-manager.

Ed Miliband (Labour, Doncaster North)

I am trying to follow the hon. Member for Cheltenham as best I can. Like the hon. Member for Isle of Wight in his amendments, he is crossing the divide between legal decisions made by the Charity Commission that are correctly challengeable in the tribunal and administrative decisions, which are a different type of practice and are not legal decisions in the same way.

The hon. Member for Cheltenham cited an example from the Alzheimer’s Society, relating to a terrible delay in something happening and said that the commission had been negligent. That is not a legal decision that is challengeable in the tribunal. He may have been right about the case he mentioned—I do not know the details—but such a case should properly be taken to the complaints procedure, the ICR and the parliamentary ombudsman. That is not just true in respect of the Charity Commission tribunal, but across the board.

Martin Horwood (Liberal Democrat, Cheltenham)

I think that the Parliamentary Secretary is wrong. A delay was not the issue in the case relating to the Alzheimer’s Foundation; the issue was the decision not to institute an inquiry. Decisions to institute an inquiry are dealt with under the schedule, so they must count as legal decisions. The schedule also deals with decisions to do something and not to do something, so the negative also applies in principle. However, that does not apply in the case that I mentioned. There is no problem of legal principle in including, as is suggested in amendment No. 85, something to allow a decision not to be made, as well as allowing it to be made. That principle is already conceded in detail in the schedule.

I have already tried to explain—perhaps not very well—that the decision does not have to be a judgment on the conduct of the administration. The decision in respect of the case that I have mentioned would be the decision to continue with the appointment, which would be a legal decision by the Charity Commission that may be based on evidence from the ongoing activities. The legal decision that the Parliamentary Secretary seeks would be the one under consideration. Perhaps he will clarify whether the decision to appoint or not to appoint is a legal decision.

Ed Miliband (Labour, Doncaster North)

I will consider the hon. Gentleman’s point on decisions not to institute an inquiry. However, his amendment has a far broader scope than a specific decision not to institute an inquiry. Amendment No. 69 refers to

“such appeals and applications as may be made to the Tribunal, in respect of decisions, orders or direction not made by the Commission which could reasonably have been made by the Commission”.

That covers a range of administrative decisions that the commission could have made. [Interruption.] The hon. Gentleman says from a sedentary position, “decisions, orders or direction”, but that covers a wide range of possible decisions, orders or directions that the commission could or could not have made. It certainly goes into the sphere of the administrative practice of the commission, which is why we do not accept either that amendment or amendment No. 85.

Martin Horwood (Liberal Democrat, Cheltenham)

I refer the Minister to proposed new section 2A(4) of the 1993 Act, which clause 8 will insert. It states:

“The Tribunal shall have jurisdiction to hear and determine...such appeals and applications as may be made to the Tribunal in accordance with Schedule 1C to this Act, or any other enactment, in respect of decisions, orders, or directions of the Commission”.

My amendment merely repeats the positive wording of the existing provision.

Ed Miliband (Labour, Doncaster North)

The hon. Gentleman makes an interesting and important point, to which I shall endeavour to return soon.

More generally, amendment No. 85 suffers from the problem that it takes the tribunal into the heart of the administrative, rather than simply the legal, principles of the commission. My point is that a significant delay in the commission’s work is obviously wrong and reprehensible, but not a matter on which the tribunal should adjudicate.

Martin Horwood (Liberal Democrat, Cheltenham)

I am extremely grateful to the Minister for giving way yet again, but the word “delay” was his and not mine. The example that I quoted was one of a decision not to instigate an inquiry, which is simply the negative of legal principles that are already enshrined in the schedule.

Ed Miliband (Labour, Doncaster North)

My understanding of amendment No. 85 is that it would go down precisely that road.

Let me move on to amendment No. 86, which takes us to the implications of a decision, not simply whether it was right or wrong. In our view—this has long been accepted for tribunals—that should not be a matter for the tribunal. The tribunal decides whether a decision was right or wrong; it does not then consider the implications of a decision. I hope that the hon. Gentleman will not press amendment No. 86, at least.

A similar argument applies to amendment No. 87 on decisions made by Ministers, because it would take the tribunal into territory which would, in a sense, be unprecedented. The hon. Gentleman made a point about the appointment of charity commissioners, but I do not believe that it is the intention of Parliament that a ministerial decision to appoint charity commissioners should be taken to the charity tribunal. If Parliament wishes to ensure oversight of Ministers’ decisions, it can do so in many different ways, but that is not a matter for a tribunal that is ruling on the Charity Commission’s decisions, just as a ministerial decision made under the Act that set up the employment tribunal should not be taken to the employment tribunal itself. On that basis, I hope that he will not press the amendment.

Amendment No. 19, which was tabled by the hon. Member for Isle of Wight, presents two problems, the first of which might be an accident, because it would mean that the commission would no longer be the respondent to an appeal. I am sure that that is an oversight in the drafting of the amendment, but its effect would be to omit paragraph 1(3) of new schedule 1C to the 1993 Act, which states:

“The Commission shall be the respondent to such an appeal.”

I am sure that the hon. Gentleman did not intend that, because it would mean that the commission would no longer have an obligation to appear and respond in person to an appeal.

The substance of the amendment has the same problem as the amendments tabled by the hon. Member for Cheltenham. It would extend the charity tribunal from its locus of more than 50 classes of decision into all areas, including administrative areas. The Government have explained why that would not be sensible.

We have some sympathy with the notion expressed in another place that the table in schedule 4 looks incredibly complex. When one becomes familiar with it and realises that the challengeable decisions are listed in column 1, it begins to look less complex. The key question is whether the guidance for people who want to go to the charity tribunal will make clear which procedures can and cannot be taken to it. I have made inquiries, and I am satisfied that the commission plans to issue guidance that is more straightforward than what is in the Bill. It is fair to say that in most cases, we would expect people who are considering whether to take a case to the charity tribunal to consult not the original legislation, but the guidance.

Andrew Turner (Conservative, Isle of Wight)

I cannot be sure, but I think that the reason why the amendment would omit sub-paragraph (3) is that the amendment is designed to give the power to request a determination and to give the tribunal the power to make a judgment, on a general point of law where there may be no respondent. Where there is a respondent, clearly it would have to be the commission; otherwise, there would be no point in appealing. To be honest, I cannot remember whether this is a drafting error, but I know that I intended that there should be a power to request the tribunal to make a decision, and therefore effectively to give guidance on what the law is, even in the absence of a decision from the commission.

Ed Miliband (Labour, Doncaster North)

I am not sure that I completely understood that intervention, but that might be more to do with me than with the hon. Gentleman. I take him to mean that he did not intend the omission of sub-paragraph (3) to have the effect of preventing the commission from being a respondent, and I accept that entirely.

I return to amendment No. 69. I said that the first principle that we are applying to the charity tribunal is that it will be an appellate body—it will deal with appeals against decisions. That is the general rule that we are following. Opening an inquiry, which the hon. Gentleman cited in relation to the Alzheimer’s Foundation, is an incredibly serious matter. The other reason why we are concerned about the amendment is that it would essentially substitute the tribunal’s decision for the original executive decision-making power of the commission, so that all decisions not to open inquiries into the 150,000 charities in Britain could be taken—

Martin Horwoodindicated dissent.

Ed Miliband (Labour, Doncaster North)

The hon. Gentleman shakes his head, but that would be the effect of the amendment. It would mean that decisions not to open inquiries—not that many inquiries take place each year; I believe that the number is in the hundreds—would leave the charity tribunal open to challenge from anyone who wanted an inquiry into a particular charity.

Martin Horwood (Liberal Democrat, Cheltenham)

I think that the Minister’s later remarks answered my point somewhat. He said that there could be thousands of challenges, but obviously common sense must intrude into the process at some point. The decision not to instigate an inquiry is taken only in response to an appeal to instigate an inquiry. The amendment would not completely open the floodgates. It is only when an inquiry is requested, as the Alzheimer’s Society did in the case of the Alzheimer’s Foundation. I cannot believe that a floodgate would be opened that would lead to an unmanageable work load. As I keep saying, there are plenty of other examples in the schedule of decisions not made being subject to review by the tribunal. I cannot see what is so different about this particular class of decision.

Ed Miliband (Labour, Doncaster North)

The difference is that the decision in question would be one of sufficient gravity that it would call into question the nature of the charity and the institution. Therefore, there is a danger of the floodgates being opened to all types of complaints against institutions. The amendment is dangerous in the breadth of what it proposes. With that information, I hope that the hon. Gentleman will withdraw his amendment.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful to the Minister for his comments. I will withdraw the amendment. However, I shall do so in the hope that the Minister, having found himself a little ill at ease in answering some of the questions that were put to him, will consider examining the schedule and making appropriate amendments in due course under the powers that are conferred in the Bill to address these serious issues.

The general principles that he has stated do not hold water. If other decisions are in the schedule, both being and not being made and in both cases being open to challenge, and if such a serious matter—the phrase he used was “of sufficient gravity”—as the decision to instigate an inquiry can be included in the positive, I cannot understand why it, like those other decisions, cannot be included in the negative as well. That seems a perfectly logical and reasonable thing to do.

I do not think that the other amendments in the group, which have not been moved and therefore cannot be withdrawn—I am learning Mr. Gale—take us into the field of administration. There is nothing to suggest that in the amendments. They allow a particular class of decision—to appoint a receiver manager—to be revisited and reopened. That does not mean that the administration has to be reviewed as a matter of legal principle. It simply allows the decision to continue with the appointment of receiver manager to be challenged. That seems a reasonable and legally justifiable step to take. With that expectation and hope, I withdraw the amendment in my name.

Roger Gale (Conservative, North Thanet)

Before I proceed, the hon. Gentleman said that at the appropriate time, he wants to move amendment No. 19. Having heard the Minister, is that still his view?

Andrew Turner (Conservative, Isle of Wight)

It is.

I beg to move amendment No. 14, in clause 8, page 9, line 17, at end insert ‘and compensation.’.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following amendments: No. 78, in clause 8, page 9, line 22, leave out subsection (5).

No. 15, in clause 8, page 9, line 28, at end insert ‘and in doing so shall have regard to the need for the charity to continue to meet its objectives.’.

No. 83, in clause 8, page 9, line 33, at end insert ‘or the decision, direction or order of the Commission which is the subject of such proceedings.’.

No. 16, in clause 8, page 9, line 33, at end insert—

‘(7A) The Tribunal may award compensation to any party to proceedings before it.’.

Andrew Turner (Conservative, Isle of Wight)

I referred to amendments Nos. 15 and 16 in our discussion on amendment No. 12. The Joint Committee, chaired by the right hon. Member for Darlington, recommended that the tribunal should have power to award compensation and/or costs against the Charity Commission. The Bill only provides for the award of costs. The Joint Committee’s recommendation was supported by, for example, the Association for Charities, which pointed out the substantial costs that could accrue to charities as a result of incorrect legal decisions. We have already heard about maladministration.

Amendment No. 15 takes us into slightly different territory: the possibility of costs being awarded against charities. Proposed new section 2B(6) of the 1993 Act in clause 8 says:

“If the Tribunal considers that any party to proceedings before it has acted vexatiously, frivolously or unreasonably, the Tribunal may order that party to pay to any other party to the proceedings the whole or part of the costs incurred by that other party in connection with the proceedings.”

Although I do not intend to encourage anyone to appeal to the tribunal vexatiously, frivolously or unreasonably, each of those things is a matter of judgment—particularly “unreasonably”. As far as I can see, there are only three parties on the side of a charity that could meet an award of costs.

First, that could mean an insurance company with which the charity has an insurance arrangement, although it is difficult to get insurance against behaving vexatiously. Secondly, such a party could be trustees of the charity. We do not want to make people fear that their trusteeship should lead to them losing their house, or something of that kind, perhaps because of a decision, for which they had a distant responsibility, taken on the recommendation of well-paid or, more likely, not very well-paid officials. Thirdly, the charity could bear responsibility for paying such costs. The costs may not be substantial, but there is no bar to representation before the tribunal. In many cases, there is an unbalanced relationship between the appellant and the respondent in such a tribunal, because the charity only has its money and the Charity Commission has lots of public money and may have retained solicitors and possibly even barristers to represent it and may be seeking those costs. There is a danger that such a decision may either bankrupt or reduce substantially the asset base of the charity.

I do not want to encourage people to behave vexatiously or frivolously, but what is unreasonable to one person is often reasonable to another. I do not know whether we are talking about Wednesbury unreasonableness or pure common or garden unreasonableness, with which we are all confronted from time to time in life, but I should not like a charity to be run out of town as a result of a decision taken by the tribunal because the tribunal did not have the responsibility, as this amendment proposes, to have regard to the need of the charity to continue to meet its objectives and, by implication, to retain a reasonable proportion of its assets.

Martin Horwood (Liberal Democrat, Cheltenham)

I sympathise with much of what the hon. Member for Isle of Wight said. I am impressed by the new concept of common or garden reasonableness. I am not sure how easy it would be to define that in law, but I am sure that Bates, Wells and Braithwaite would charge a healthy fee to find out.

My amendments Nos. 78 and 83 have similar aims to those tabled by the hon. Gentleman, but they would achieve them differently, by omitting Clause 8(5)—

“The Tribunal may award costs only in accordance with subsections (6) and (7)”—

which restricts the extent to which costs may be awarded. Amendment No. 83 is a consequent amendment to No. 78. Although I should like those to be considered, I am broadly sympathetic to the hon. Gentleman’s amendments and am happy to support them.

Andrew Turner (Conservative, Isle of Wight)

On a point of order. I should have given notice of my intention to speak on amendment No. 15.

Ed Miliband (Labour, Doncaster North)

This is an important matter and an important part of the clause. Amendments Nos. 14 and 16 in a sense go together, because they both concern compensation. The Government believe that the tribunal should be able to award costs against the commission, and that is the position taken in the Bill. The problem, which has been mentioned in relation to earlier amendments, is that although the amendments would widen the scope of the tribunal and give it the remit to consider compensation claims, compensation is not a matter for tribunals. The tribunal makes alegal finding. Compensation is a matter for the independent complaints reviewer, which has the power to recommend a consolatory payment, or for the parliamentary ombudsman, who can recommend any level of redress if the complainant has evidence that he or she has experienced quantifiable financial loss, or inconvenience, or worry.

Although I sympathise with the motivation for the hon. Gentleman’s amendment, the tribunal makes a finding of legal fact and can award costs against either party, depending on how they have acted, in the manner set out in subsections (6) and (7). However, questions of compensation for financial loss and other matters are not questions for the tribunal.

Andrew Turner (Conservative, Isle of Wight)

I am having difficulty working out whether the Minister means a tribunal in the sense of a tribunal as referred to in the Bill, and also whether, when he talks about the way the tribunal system works, he means the tribunal system in the context of the Bill, or tribunals more generally. [Interruption.] He is talking about the Bill. I was going to say that other tribunals, such as employment tribunals, can make compensation payments. If he means tribunals as referred to in the Bill, that is why we are proposing the amendment, because we want to change the system in the Bill, although doubtless the Minister will tell us more about why we should not.

Ed Miliband (Labour, Doncaster North)

My understanding is that, in the case of tribunals dealing with appeals against public bodies, the practice is not for compensation to be awarded by the tribunal but for compensation to go through the independent complaints reviewer and the parliamentary ombudsman.

Peter Bone (Conservative, Wellingborough)

If the tribunal rules in one direction and compensation is then awarded by the parliamentary ombudsman, does the parliamentary ombudsman have the power to force that compensation to be paid?

Ed Miliband (Labour, Doncaster North)

The parliamentary ombudsman does not have the power to force compensation to be paid, but the commission will almost always accept the parliamentary ombudsman’s recommendation. If the recommendation were not accepted, there would have to be a report to the Select Committee on Public Administration. Acceptance is not compulsory, but I think that I am right to say that in custom and in practice the commission always accepts the ombudsman’s advice.

Peter Bone (Conservative, Wellingborough)

But the only way in which we could guarantee payment of compensation would be by allowing the tribunal to award it. We have seen cases in which the parliamentary ombudsman has said that the Government have to do something about pensions and the Government have totally rejected that recommendation. The only way to ensure that compensation will be paid would be to provide for that in the Bill.

Ed Miliband (Labour, Doncaster North)

I take the hon. Gentleman’s point. Nevertheless, we have an assurance that the commission follows the recommendations of the independent complaints reviewer—that is its record, and follows the advice of the parliamentary ombudsman. That is how the system works for public bodies, and it is a perfectly reasonable way forward.

Andrew Turner (Conservative, Isle of Wight)

The Parliamentary Secretary seems to be falling into the trap of confusing the exact two issues that he complained were being confused by the hon. Member for Cheltenham and me earlier. I am talking about, on the one hand, the administrative issues, which go before the independent complaints reviewer and the ombudsman, and on the other, the legal issues, which go before the tribunal.

I accept that legal issues can go to the independent complaints reviewer, but it seems absurd that, having gone to all the trouble of getting a tribunal decision, someone would have to go to someone else, to start, presumably, with a blank sheet. I accept that that blank sheet would contain the decision, but the compensation would then have to be assessed. That seems to build an unnecessary hoop into the system.

Ed Miliband (Labour, Doncaster North)

I am not sure about a hoop. The parliamentary ombudsman and the independent complaints reviewer have experience in such matters of financial loss, in working out the effect of any maladministration and in making a judgement. If we were to do this, we would give the tribunal a new set of responsibilities as regards quantifying the extent of financial loss and so on. I do not accept that there is a new hoop; it is either an additional responsibility for the tribunal or it builds on existing responsibilities for the ombudsman and the independent complaints reviewer.

I move on to amendment No. 78, which was tabled by the hon. Member for Cheltenham. It would widen the powers of the tribunal—not, on this occasion, to provide compensation, but to provide costs. As I understand it, its effect would be to do so in all circumstances, not only those in which either party had acted unreasonably, vexatiously or frivolously. Again, we can be sympathetic to the intentions behind the hon. Gentleman’s amendment, because we do not want a Goliath Charity Commission against a David complainant.

However, I caution the Committee against turning things into a lawyer’s paradise. Some would say that about employment tribunals, although I could not possibly comment. We want the process to be a simple and straightforward one, in which people can go to tribunals, get easy means of redress and represent themselves. We do not want to create lots of business for Bates, Wells and Braithwaite and other firms, worthy though the individuals working for them may be.

There is a danger that in giving such a broad allowance for costs, essentially the same as that of any court of law, we would open up the process—on both sides, to be fair—to large legal costs. The point applies equally to the Charity Commission. At the moment, the commission will have to pay its own costs unless it can show that the other side has acted frivolously, unreasonably or vexatiously. If we accepted the hon. Gentleman’s amendment, the Charity Commission could run up big legal costs, if it was confident of victory, and charge them to the other side. That might also cause dangers and threats to the charities concerned.

I understand the sentiment behind the amendment, and it is important that as we scrutinise how the tribunal works in practice, we ensure that it has proper means of redress. The overall principle is supported on both sides: going to the High Court as the only route of redress against the commission is not sufficient. There needs to be an easy means of redress. Let us not try to turn the tribunal into another version of the High Court. That is my fear about the amendment and, on that basis, I hope that the hon. Gentleman will not press it to a Division.

That takes me to amendment No. 15. It is a reasonable proposition of the hon. Member for Isle of Wight, but I fear that there is a danger. It is qualifying the awarding of costs in cases when a charity is considered to have acted vexatiously and unreasonably. I understand the hon. Gentleman’s motivation. He does not want lots of worthy charities facing huge costs as a result of a tribunal case. However, the proposal would open up the tribunal system to vexatious individuals who will want to take a case. In a sense, they would be assured that the charity itself will have a degree of protection, even if the individuals within it were acting in a vexatious way. Let us be honest:the test of vexatiousness, frivolousness or unreasonableness is pretty stern. The Wednesbury test concerns unreasonable action that no reasonable person would have followed. It is not simply that someone is adjudicated to be on the wrong side of an argument. Unreasonableness is a much sterner test than that. The gap between being wrong and being unreasonable is very wide.

Peter Bone (Conservative, Wellingborough)

I entirely understand the Minister’s argument. Sitting in this room, it makes perfect sense. However, it tends to err on the side of the Charity Commission. Let us suppose that a small charity thought that some wrong had been done. In reality, it would challenge the decision, go to the tribunal and make its case. Then comes the problem. It might think that the Charity Commission would employ solicitors and barristers who run up huge fees and bankrupt it, as a result of which it would not risk going to the tribunal.

Ed Miliband (Labour, Doncaster North)

I completely understand the hon. Gentleman’s point. It is a judgment call that we have to make in such circumstances. I assure the Committee that a review has to take place within five years of the workings of the Act, but it is incredibly important for the Government to keep under close watch the way in which the tribunal system starts to unfold and work. I have considered setting a timetable for a specific review of the tribunal, but that is probably not sensible because it would be better for there to be a real obligation and pledge on behalf of the Government to scrutinise the way in which the system works and not to set an arbitrary time limit on it. If big issues of access of justice, however, were raised, we would need to think again and find ways in which we can solve the difficulty.

I come now to the final amendment, No. 83. It refers to proposed section 2B(7), which states:

“If the Tribunal considers that a decision, direction or order of the Commission which is the subject of proceedings before it was unreasonable, the Tribunal may order the Commission to pay to any other party to the proceedings the whole or part of the costs incurred by that other party in connection with the proceedings.”

The Liberal Democrat amendment would add:

“or the decision, direction or order of the Commission which is the subject of such proceedings.”

That is another sense in which recompense for any financial loss incurred is being introduced. I have explained why we think that that is an appropriate role for the ICR and the parliamentary ombudsman.

I hope that that deals with the amendments before us, and that they will be withdrawn.

Andrew Turner (Conservative, Isle of Wight)

I do not propose to withdraw amendment No. 14, because I think that the Parliamentary Secretary’s answer is bizarre. He is saying that a legal matter for which the appellant might already have gone through the Charity Commission’s complaints procedure and to the independent case reviewer might then go to the tribunal and be successful. Because of the effect of that earlier legal decision, the charity might have incurred losses. He is saying that it should then retrace its steps and return to the commission and the parliamentary ombudsman.

First, that would essentially mean explaining quite a bit of the case again, because it would mean explaining why the appellant made the losses. Secondly and more tellingly, going to the parliamentary ombudsman assumes maladministration. Not all legal errors are maladministration. Some are quite simply the result of getting it wrong, which is not maladministration. Knowing the law and getting it wrong might be maladministration, but if the law is genuinely unclear and the tribunal decides what the law is, that is not maladministration.

So why on earth go to the ombudsman for compensation? Is the Minister saying—perhaps he is—that the ombudsman would have the power to provide compensation in a case that was not maladministration?

Ed Miliband (Labour, Doncaster North)

That is where the ICR comes in.

Andrew Turner (Conservative, Isle of Wight)

The ICR probably decided in the first place that it was not a mistake in law. If an employment tribunal can offer compensation, I do not see why the charity tribunal should not. To recount a personal anecdote, I became aware of a recent employment tribunal case by virtue of my membership of the House. It took two and a half days to hear the case and about 10 minutes to agree the compensation. That seems to be a sensible way of proceeding. Of course the amendment would give the tribunal a new power; the tribunal is new. That is not a very good argument, and I intend to press the amendment.

On access to justice, the Minister was much more conciliatory. He said that he had considered a timetable for specific review of the tribunal’s judgments, he said that a big issue of access to justice would make the Government think again and, most tellingly, he said to my hon. Friend the Member for Wellingborough (Mr. Bone) that it is a matter of judgment. It is a matter of judgment. I would like charities to feel that if they think the commission has behaved unlawfully, they can go to the tribunal without serious risk of their assets. For that reason, I shall press the amendment.

Roger Gale (Conservative, North Thanet)

I apologise for the delay. For those who were not privy to the conversation, we were considering the possibility that we may need a third session on Tuesday evening. That has not been determined, but the usual channels will do so in due course. Members might bear that in mind when reviewing their diaries. I do not like Members or, indeed, staff to be caught on the hop if that is avoidable.

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move amendment No. 68, in page 9, line 36, leave out from ‘to’ to end of line 37 and insert—

‘a draft being laid before, and approved by a resolution of, each House of Parliament.’.

I shall endeavour to be brief. The thrust of the amendment is clear. It would require of both Houses a positive resolution for an order made by the Lord Chancellor under this clause. That would simply reflect the gravity of the issues under discussion, which the debate has illustrated already.

Tribunal decisions can affect the careers and personal assets of those involved in charities. They can affect the welfare of beneficiaries, and the reputation and therefore the very future of the charity itself. The decisions, the way in which they are reached and the rules that pertain to them are critical.

Ed Miliband (Labour, Doncaster North)

I shall be brief. The House of Lords Select Committee on Delegated Powers and Regulatory Reform reviewed the Bill comprehensively. It reported in the 2004-05 Session, and we accepted its recommendations and amended the Bill accordingly. It found the order-making powers to be appropriate and subject to an appropriate level of parliamentary scrutiny. The Government recognise that the rules will be of great interest to the sector and others, and important for the effective operation of the tribunal. We will begin work on them soon after the Bill’s passage, and we will commit to consulting on the draft rules with stakeholders, for which the Bill provides.

I shall also be happy to repeat to the Committee the undertaking that Lord Bassam gave in another place to include any hon. Members who express an interest in the consultation on the draft rules. On that basis, and with the comfort of the report from the Delegated Powers and Regulatory Reform Committee, I hope that the hon. Gentleman will withdraw the amendment.

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to ask leave to withdraw the amendment.

Andrew Turner (Conservative, Isle of Wight)

I beg to move amendment No. 17, page 9, line 40, at end insert—

‘2BA Suitors’ fund

(1) The Tribunal shall administer a fund (“the suitors fund”) from which it will contribute to the costs of those seeking to bring appeals and applications in accordance with Schedule 1C of this Act or appeals in accordance with section 2C of this Act.

(2) The fund shall be provided by the Commission.’.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss amendment No. 80, in page 9, line 40, at end insert—

‘2BA Suitors’ fund

(1) The Tribunal shall administer a fund (a “suitors’ fund”) from which it will contribute to the costs of those seeking to bring appeals and applications in accordance with Schedule 1C to this Act or appeals in accordance with section 2C of this Act.

(2) The fund shall be maintained at a value of £100,000.

(3) The fund shall be provided by the Commission.’.

Andrew Turner (Conservative, Isle of Wight)

Amendment No. 17 is one of the most important amendments to the Bill. The National Council of Voluntary Organisations felt that the issue of right of access to justice was one of the two most important issues requiring amendment when the Bill was debated in another place in June 2005. Unless there is a cost provision to enable smaller charities in particular to have access, the tribunal will be seriously underused. Indeed, many charities will not have access to it. Lord Phillips of Sudbury used two telling expressions. He said:

“Our law is cluttered with tribunals that afford theoretical remedy to agreed citizens—”

it says “agreed” in the Lords Hansard, but it is meant to be “aggrieved”—

“but are inaccessible because they are so expensive to access.”—[Official Report, House of Lords, 12 October 2005;Vol. 674, c. 350.]

In sharp contradistinction to what the Minister said a moment ago, although not out of any intent, Lord Phillips also said that if one keeps the lawyers out, one keeps common sense in. I know that the Minister does not intend to turn the tribunal into an alternative High Court of Justice, but sadly, employment tribunals, and for all I know, many others quickly get stacked up with lawyers who use up far too much time, far too much energy, and in particular, far too much money.

The Minister may feel that providing a little money to help the charity that wishes to appeal against a decision of the commission will encourage the lawyers. However, my view is that it will encourage decisions to be made on a level playing field on important legal issues.

The commission does not have unlimited resources—we do not know what resources it will have—but it will want to put the best defence that it can in any case at tribunal and it may have to make a judgment mid-year to spend more on representation and less on public benefit tests. The problem is that it has the capacity to spend a good deal of money on representation, while the appellants do not. The creation of a suitors fund was recommended by the Prime Minister’s strategy unit in 2002. I feel strongly that we have to provide some means by which the small appellant can get to the tribunal.

Lord Bassam said in another place that he accepts that

“even small expenses may be beyond some small charities.”

I accept that. He also said:

“The Attorney-General will present cases at his own expense, so the consideration should not trouble us too much, but I accept the point that there may be difficulties for smaller charities.”—[Official Report, House of Lords, 28 June 2005; Vol. 673, c. 215.]

The Attorney-General is likely to get involved in very few cases before the charity tribunal. Indeed, the Minister in the other place accepts that, because I think that he suggested that an alternative source of funding could be the legal aid fund in exceptional cases. Again, we are talking about exceptional cases.

The legal aid fund is no more generously provided for than many other good causes. That is not a criticism of the Government. My noble Friend Lord Swinfen said on 12 October 2005 that the Minister in the other place opposed the amendment in question

“on the grounds that the Legal Services Commission will be able to grant exceptional funding in certain cases, usually public interest or test cases.”

He continued that

“the noble Lord, Lord Phillips, who is an extremely eminent charity lawyer, replied that he was unaware of the legal authority of the Legal Services Commission and that the general position has been that legal aid is unavailable to charities.”—[Official Report, House of Lords, 12 October 2005; Vol. 674, c. 351.]

Even if such funding is available, there is not much of it. We need a suitors fund so people have the opportunity to appeal. I am not suggesting that that should involve a huge amount of money and I am not even suggesting an amount of money, unlike the hon. Member for Cheltenham, although I hope that the sum involved would be near to the one in amendment No 80, and I hope that there would be a fund to allow access to justice for the small charities that deserve it.

Martin Horwood (Liberal Democrat, Cheltenham)

I agree with the hon. Member for Isle of Wight that this is one of the most important amendments that we are considering today. I remember, long ago, back in 2002, when I worked as a mere grubbing consultant advising charities on their fundraising strategy, that there was the possibility of a Cabinet Office strategy unit report on the voluntary sector. That report eventually resulted in this Bill. However, years later, we are still trying to get it on the statute book. That report recommended the creation of a suitors fund. That suggestion was supported widely by charities, including the NCVO, and many of our noble friends in another place, including Lord Phillips of Sudbury, whose opinions I always value and often agree with.

As the hon. Member for Isle of Wight said, the response by Lord Bassam of Brighton in the House of Lords was wildly unrealistic. The idea that small charities would have the confidence to take on the possible costs of taking a case to the tribunal and that, if they had limited funds or their funds were stretched in that year, they would have to rely on the intervention of the Attorney-General or prove that their case was exceptional to the satisfaction of a legal aid body, is hopelessly unrealistic.

The suggestion has had widespread support. It is unfortunate that it got lost on the way to another place, and there is a possibility that that was a result of the Treasury being rather worried that it was some kind of blank cheque. The reason for the slight difference between our amendment No. 80 and Conservative amendment No. 17 is that we insert some reference to the value of the fund.

Ed Miliband (Labour, Doncaster North)

Liberal Democrat responsibility.

Martin Horwood (Liberal Democrat, Cheltenham)

Absolutely. We always like to cost our proposals and to have them fully examined from a financial point of view. That is certainly the responsible thing to do. It is a serious point; if the reason for the opposition to the idea was the Treasury’s worry that the fund might be a blank cheque and an open-ended pot of money for charities to bring every complaint possible, I am sure that all members of the Committee and most Members of the House would be open to whatever methodologies or processes that the Government wish to propose that would enable that to happen. I caution the Minister not to dismiss the idea too frivolously. It was in the original strategy unit report and, as I have said, has been widely supported in the sector. There is obvious justice and reason behind its inclusion in the Bill.

Peter Bone (Conservative, Wellingborough)

This fund would allay, to a large extent, some of the fears that I previously referred to, and it all goes back to the classic case. Most charities are small. The fund is irrelevant to big charities as they have all sorts of departments and can arrange their affairs rather like big business—big business has no problems with anything and has departments for this, that and the other. Small businesses cannot take remedy because they do not have the time or the money, and the fund at least helps with the money side of the situation. They need only a relatively small amount at least to have the injustice heard. There is a lot to recommend the idea, and I hope that the Minister can take it on board.

Peter Bottomley (Conservative, Worthing West)

When the Minister is explaining why the strategy unit’s recommendation is not being taken forward, he might explain, too, whether the idea was that a suitor had to be the charity itself, an individual trustee, or an outsider with an interest in what the trust ought to be doing. He will not be surprised that I have more than one brother-in-law. The one I have in mind is Dr. George Reid, who is a trustee of the Alleyn’s estate. He went to the High Court—not at a cost of £30,000—and received an honourable mention in the Charity Commission’s report 15 or 20 years ago. He had the sort of case that it was proper to have taken, about a failure to get agreement among the trustees, and would clearly have been regarded as a suitor. That may or may not have been a suitable case, but the interesting question is where the limitation comes in and where would it have been if the strategy unit’s approach had been taken forward. If the Minister is going to resist the amendments, he could explain to the Committee whether that is being done purely on the grounds of cost, whether he thinks they are unnecessary or whether there is some other reason of which we have not thought.

Ed Miliband (Labour, Doncaster North)

Again, the hon. Member for Worthing, West appears just before I stand up to speak. I believe that his family goes off for a ceremonial cricket match each year, which is well known.

Peter Bottomley (Conservative, Worthing West)

A hockey match.

Ed Miliband (Labour, Doncaster North)

I may have got that slightly wrong.

First, I do not think that the strategy unit simply recommended a suitors fund. As I understand it—I shall check on this point—it saw it as an alternative to the tribunal and a way of funding people to go to the High Court. We can be sympathetic to the intentions behind the amendments, but the problem is essentially raised because the Conservative amendment is open ended while the amendment tabled by the hon. Member for Cheltenham is limited. In neither case is there any sense of the criteria that would be used for who is eligible and who is not. Therefore, one faces a problem with the hon. Member for Isle of Wight’s amendment. The costs are potentially unlimited and it could be a lawyers’ charter. I am not saying that it would be one, but it could be. I admire the hon. Member for Cheltenham’s fiscal responsibility—that is a new-found thing for the Liberal Democrats—but he does not answer the question as to who would get that £100,000, who one would turn away and how one would judge that point.

Having said all that, I am in a charitable mood and understand the intentions behind the proposal and I do not want to dismiss it out of hand. I know that the question of the suitors fund has been long standing. I will take the issue away and come back on Report. I do not make any promises on that point because it is difficult. The example of employers tribunals and issues of legal aid are informative in that respect but I will take the issue away and consider it.

Andrew Turner (Conservative, Isle of Wight)

I am grateful to the Minister. I beg leave to withdraw the amendment.

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move amendment No. 79, in page 10, leave out lines 17 to 36.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss amendment No. 18, in clause 8, page 10, line 36, at end insert—

‘2E Investigation by Parliamentary Commissioner for Administration

Notwithstanding the provisions of this Part, the Parliamentary Commissioner for Administration shall have power pursuant to section 5(1) of the Parliamentary Commissioner Act 1967 (c. 13) (matters subject to investigation) and Schedule 2 to that Act (Departments etc subject to investigation) to investigate any action taken by, or on behalf of, the Commission.”’.

Martin Horwood (Liberal Democrat, Cheltenham)

Amendment No. 79 is a probing one that challenges the rather extraordinary proposed section 2D, which is one of the amendments to the 1993 Act, and on page 10 of the Bill. Having set up a panoply of commission and appeal processes and the opportunity of all the types of processes that we have been discussing at inordinate length today, it creates another provision that adds intervention by the Attorney-General on top of that. I would love to hear the Government’s justification for that.

Andrew Turner (Conservative, Isle of Wight)

My amendment No. 18 tries to avoid doubt, which is always a dangerous thing to do. It occurs to me that the parliamentary commissioner may be capable of resolving issues that might otherwise go to the tribunal. I say that with a sense of inquiry. Is the Minister sure that any issue that is reasonably likely to be raised can either go through the complaints procedure to the parliamentary commissioner or to the tribunal? If that is the case, would it be beneficial for the parliamentary commissioner to be able to look at questions of law as well as those of administration?

Peter Bottomley (Conservative, Worthing West)

First, could the Minister explain whether under the proposed section 2D(4)(a) and (b), the Attorney-General’s power to intervene—which I welcome—extends to being able to order a discontinuation of an action or is it a matter of helping the tribunal in one sense or another? Second, does the Minister regard this as a suitable occasion to say whether—although this goes slightly beyond the clause—if the Charity Commission causes a High Court action to be taken against a charity, the Attorney-General has the power to order that kind of action to be discontinued?

Ed Miliband (Labour, Doncaster North)

The hon. Member for Worthing, West is continuing his enviable record of asking difficult questions—I preferred his last intervention to this one. Let me provide an explanation on those two points. The first amendment seeks to remove the Attorney-General’s right to intervene in any proceeding. That is in the Bill because the Attorney-General has a unique—some might say slightly odd—and important position in charity law. He is the protector of charity on behalf of the Crown. It is important to be clear about that.

Those powers for the Attorney-General to intervene do not mean that he represents either party in the dispute, but that he is supposed to have a non-adversarial role, essentially as a friend of the court, in representing the interests of the beneficiary. That is a long-standing feature of the law in this area. It is not about the Attorney-General somehow moving in on the case in an adversarial way; the role is that of a non-adversarial friend of the court. I believe that it is widely acknowledged to be a perfectly sensible idea that he should represent a beneficial interest of the charity and that the tribunal can take his views into account.

To answer one question that was put to me by the hon. Member for Worthing, West, I am pretty sure that the Attorney-General cannot overturn the tribunal’s decisions. I shall have to come back to him later about his second brain teaser.

I move to amendment No. 18, which was tabled by the hon. Member for Isle of Wight. Let me be clear on this. As I explained earlier, the tribunal considers legal decisions, and the ombudsman has the power to investigate cases of maladministration. I understand that the hon. Gentleman wants to be assured that that is the case, and I can assure him that it is. The danger of his amendment is that it seems to open up a case in which a legal decision is being considered by the tribunal, to being considered by the ombudsman at the same time. That would be slightly odd, because one wants the tribunal to be able to take its course and for any claim of maladministration then to be made, but not for those processes to run in parallel.

Peter Bottomley (Conservative, Worthing West)

The Minister said that he might come back to a question that I asked. I am perfectly happy to wait until our debates on clause 38, especially if we get to consider amendment No. 122, which might be helpful to his advisers.

Ed Miliband (Labour, Doncaster North)

I am most grateful. I give way.

Andrew Turner (Conservative, Isle of Wight)

It is certainly not my intention that cases should be considered in parallel or consecutively bythe tribunal and the ombudsman. My concerns are partly to do with the position of the independent complaints reviewer. I understand that the parliamentary ombudsman can consider cases only if domestic remedies have been exhausted. I assume that the work of the independent complaints reviewer is considered to be a domestic remedy for that purpose, and that one would therefore first have to go through the complaints procedure and then the independent complaints reviewer. The Minister shakes his head, so it seems that that is not the case.

It is the case, however, that a large number of complaints that have been to the ombudsman have been rejected as being out of the ombudsman’s jurisdiction. The figures that I have concerning cases since 1993 are that out of 102 cases, 63 have been rejected as being out of jurisdiction. It might be that those were all legal cases or that they were complaints about charities that should never have gone to the ombudsman; the ombudsman does not know, although the latter is assumed. Where an easier and simpler remedy than the tribunal is available, which I think that going through the ombudsman might be, it should be available despite the fact that the tribunal is available.

Ed Miliband (Labour, Doncaster North)

I think that that was the longest intervention in world history, Mr. Gale.

Roger Gale (Conservative, North Thanet)

I was thinking of it as a speech.

Ed Miliband (Labour, Doncaster North)

I shall enter it into the “Guinness Book of Records”.

I should like to clear up one point. There is the internal complaints procedure of the commission, there is the independent complaints reviewer, and there is the ombudsman. It is true that an individual must go through the internal complaints procedure of the commission, but I understand that they also have the option of going to the ICR or the parliamentary ombudsman. I do not have an answer on the specific figures that the hon. Gentleman cites, but I suspect that all the cases concern legal decisions that can now go to the tribunal; I hope that the tribunal will help in that respect. I hope that that answers his question sufficiently.

I can now answer the hon. Member for Worthing, West, because inspiration has struck. The Attorney-General has no power to order the discontinuation of a case before the tribunal or the High Court. Discontinuation will be a matter for the party bringing the proceedings; otherwise, the tribunal or High Court could of course order the case to be dismissed.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful to the Minister for his reply on amendment No. 79. He made an important statement about the interest of beneficiaries and the beneficial interest. I am tempted to quote an earlier assertion of his back at him. He said that specific provisions in the Bill reflecting the interests of beneficiaries might somehow unbalance the legal processes or the workings of institutions such as the commission and the tribunal, which we discussed today. If that is the role of the Attorney-General in the Bill, and if the Attorney-General will be minded to intervene on behalf of the beneficial interest of charities, and not in other ways, then on reflection I am content to withdraw my amendment, and to let the clause survive.

However, I suggest to the Minister that there might be a bit more clarity and transparency in the Bill specifically to reflect the interests of the beneficiaries and the fact that they do, after all, have a champion in this Bill. That would—if I might risk offending the Royal Society for the Protection of Birds—kill two birds with one stone. I beg to ask leave to withdraw the amendment.

Schedule 4

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move amendment No. 81, in schedule 4, page 96, line 45, at end insert—

‘1

2

3

Appointment of a receiver and manager in respect of the property and affairs of the charity under section 18(1)(vii) and section 19 of this Act.

The persons are— (a) any person whose powers or duties as a trustee are performed or exercised by the receiver or manager under the order, and (b) any other person who is or may be affected by the order.

Power to— (a) quash the order and (if appropriate) remit the matter to the Commission, (b) substitute for all or part of the order which could have been made by the Commission, (c) direct the dismissal and replacement of the receiver or manager.’.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss amendment No. 82, in schedule 4, page 96, line 45, at end insert—

‘1

2

3

The continued appointment of a receiver and manager in respect of the property and affairs of the charity under section 18(1)(vii) and section 19 of this Act.

The persons are— (a) any person whose powers or duties as a trustee are performed or exercised by the receiver or manager under the appointment, and (b) any other person who is or may be affected by the appointment.

Power to— (a) end the appointment, (b) direct the ending of the appointment and remit the matter to the Commission, (c) direct the dismissal and replacement of the receiver or manager, (d) transfer the responsibility for paying all or part of the costs of the receiver or manager to the Commission, (e) direct the compensation of the charity by the Commission for all or part of the costs already incurred by the receiver or manager.’.

Martin Horwood (Liberal Democrat, Cheltenham)

We have at times been a little rude about schedule 4, particularly about its size, complexity and tables. However, I am not sure that I entirely go along with what has been said about it; I am quite impressed by it. I would rather like to congratulate the drafters of the Bill on their clear setting out of what can and cannot be presented to the tribunal, who can make the applications, and what the outcomes may be. It is quite easy to follow, and it is therefore quite easy to spot when things have been missed out.

Earlier, we discussed amendments through which I was trying to introduce exactly what I am trying to introduce here, and various objections were made to my broader approach in the main part of the Bill. The suggestion was made that my earlier amendments might offend various legal principles, in terms of not being legal decisions or drawing in administration. I hope that these extremely detailed amendments to the schedule will not commit any of those crimes. I urge the Minister not to dismiss them frivolously, because they deal with extremely serious issues that may—as we know from the Association for Charities document—affect the very existence of some charities, and certainly the value of their assets. The costs incurred in the course of the appointment of a receiver and manager may sometimes hugely exceed those expected, even by the charity commissioner, at the time of appointment.

There are major issues at stake. The Charity Commission is an extremely powerful body and it is right that we should address in detail the decisions that it makes. Amendment No. 81 covers the appointment of

“a receiver and manager in respect of the property and affairs of the charity”,

which is a decision analogous to others set out in the schedule. The mention of the

“continued appointment of a receiver and manager”

in amendment No. 82 carries no suggestion of drawing the tribunal into the matter of administration, covering merely the whether the continued appointment is appropriate. Evidence might be brought to bear from the consequences of that continued appointment, and that is as it should be. That would surely apply also to any of the other matters listed in the schedule—it is difficult to see how they could be discussed without reference to their consequences.

I give you notice that I shall want to move amendment No. 82 when I may, Mr. Gale. The amendments contain important detail and I hope that they avoid the legal difficulties on the grounds of which the Minister objected to earlier amendments.

Andrew Turner (Conservative, Isle of Wight)

I would like to support the amendments. Judging by the information that I have been given, I do not think that there can be a more serious decision affecting a charity than the appointment of a receiver and what we now hope to call an interim manager.

Ed Miliband (Labour, Doncaster North)

To short-circuit the discussion, amendment No. 81 simply duplicates an existing provision in the Bill. It is rather opaque, so I shall set it out for the Committee. It is on page 95, column 1 and relates to an order

“made by the Commission under section 18(1) of this Act in relation to a charity.”

It is precisely about the appointment of a receiver-manager. I thought that I would short-circuit what would no doubt have been an eloquent speech by the hon. Gentleman.

Andrew Turner (Conservative, Isle of Wight)

I am grateful, and I am sure the Committee is equally grateful that it will be deprived of my eloquence on amendment No. 81.

On amendment No. 82 the matter to consider is not only the appointment of a receiver-manager but the decisions that follow it, if decisions they be. I assume that the commission has a duty to take care of the assets of charities, but in a case that has been brought to my attention the continued appointment of an interim manager for the Cancer Care Foundation led to expenditure of £325,000 in about eight months by PricewaterhouseCoopers and additional £300,000 costs to the charity’s trading company. That is a considerable amount of money even to what appears to be a charity with a certain amount of money in the bank. It had £800,000 but was forced by the decision of the Charity Commission to spend £325,000 of it.

It may well be that there was a good case for the appointment of a receiver-manager, but I am inclined to ask whether there is a process for deciding whether there was a good case for the continuation of that appointment. That is why I intend to support amendment No. 82. I also ask whether there is a good case for better monitoring of the expenditure of the receiver-manager at the charity’s expense. If a charity has £800,000 in the bank and donors are bringing in £50,000 a month, as I believe they were for the benefit of the hospices supported by the Cancer Care Foundation, one has to ask why that money was not going out to the hospices supported by the Cancer Care Foundation, one has to ask why that money was not going out to the hospices and whether the donors were receiving good value for the £325,000 that PricewaterhouseCoopers billed the charity.

Of course, there may be a good case for the appointment and the continuation. However, the question is whether the decision is legally right and whether the expenditure should be undertaken without proper review.

Peter Bottomley (Conservative, Worthing West)

Will the Minister make clear whether there is a difference in law, or in the Bill, between references in column 2 to “trustees” and the amendment’s mention of

“any person whose powers or duties as a trustee are performed”?

For me, there is an ambiguity, which I am sure is clear to experts, about whether column 2 refers to the majority, all or two of the trustees, or whether a single trustee could be counted as the “trustees”.

Ed Miliband (Labour, Doncaster North)

The hon. Member for Worthing, West is keeping up his fine record of asking difficult questions. I shall endeavour to come back to him on that point.

I have already dealt with why amendment No. 81 is unnecessary; I assure the Committee that what it requires is already in the Bill, albeit rather implicitly. On amendment No. 82, there is a distinction that is difficult to draw, but it is nevertheless there. The hon. Member for Isle of Wight put it well in talking about the decisions taken by the interim manager. However, that is a question of the conduct of the charity.

We would not suggest that the charity tribunal intervene in the decisions made by the charity trustees or persons acting in lieu of the charity trustees—namely, the interim manager. I do not think that the hon. Member for Cheltenham would support the idea that the charity tribunal should have jurisdiction over what the trustees do.

The interim manager is appointed in lieu of trustees. I appreciate that the distinction between the original appointment of the interim manager, which is a legal decision, and the question of conduct and decisions made by the manager, may be hard to discern. However, there is a distinction and it is right to hold to it.

The Charity Commission has a duty to conduct periodic reviews of receiver managers and what they are doing, and—this may offer last-minute reassurance to the hon. Gentleman—if, on review, the commission decides not to end a receiver manager’s appointment, that decision can be taken to the charity tribunal. In other words, there is an appeal against the Charity Commission’s decision to continue with the interim manager after a periodic review.

Peter Bone (Conservative, Wellingborough)

Could the Minister tell the Committee to whom the receiver manager owes a duty?

Ed Miliband (Labour, Doncaster North)

As I understand it, the receiver manager is acting on behalf of the beneficiaries of the charity.

Martin Horwood (Liberal Democrat, Cheltenham)

The Minister has made a critically important statement. The intention seems to be entirely in line with the amendment and with many of the concerns that we have raised today. The practice may not quite be there yet in that he talks about a periodic review, but if I interpret correctly what he said it seems to be entirely at the discretion of the commission, and it apparently has no obligation to do it at a particular time. However, it seems to be within the Minister’s powers to make regulations or orders directing the commission to conduct periodic reviews, or to amend the table in order to have reviews at specific timetabled periods, or some other mechanism. We seem to be nine tenths of the way to agreement.

If the Minister can assure me that he will pursue that one last remaining issue of the timetable of the periodic review, assure me that it is a genuine opportunity to challenge the continued appointment of a receiver and manager, then I would be very reassured indeed.

Ed Miliband (Labour, Doncaster North)

I must be careful. It is not for the Minister to tell the commission how often the periodic review should be. However, in the interest of harmony, I shall endeavour to return later and tell the Committee how often the periodic reviews should happen, and the basis of their determination. I hope therefore that the hon. Gentleman will withdraw the amendment.

Martin Horwood (Liberal Democrat, Cheltenham)

I am encouraged by what I have heard. I beg to ask leave to withdraw the amendment.