Charities Bill [Lords]

Public Bill Committee, 13 July 2006.

Standing Committee A

Clause 51

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move amendment No. 146, in clause 51, page 58, line 14, at end insert

‘although not in a form that might reasonably discourage legitimate applications,’.

Joan Humble (Labour, Blackpool North and Fleetwood)

With this it will be convenient to discuss the following amendments: No. 138, in clause 51, page 58, line 18, at end insert

‘, and

(d) must include provision to combine the processes for registration and application for a certificate.’.

No. 147, in clause 52, page 58, line 37, at end insert—

‘(4A) Conditions under subsection (4) must not be in a form that might reasonably discourage legitimate applications.’.

No. 139, in clause 53, page 59, line 21, leave out paragraph (e).

No. 148, in clause 53, page 59, line 23, leave out from ‘inadequate,’ to end of line 24 and insert

‘having regard to all circumstances.’.

No. 142, in clause 53, page 59, line 35, leave out

‘or any person authorised by him’.

No. 141, in clause 53, page 60, line 9, leave out sub-paragraph (i).

No. 149, in clause 57, page 63, line 31, leave out subsection (4).

Martin Horwood (Liberal Democrat, Cheltenham)

How good it is, Mrs. Humble, to see you back in your regulatory function.

How topical can we be? I struggled last week to find a newspaper story relevant to our deliberations, but we are now discussing fundraising and the newspapers have pages on the subject. I am sure that it would be a good idea for political parties to follow the rules and self-regulation that we are discussing today in the context of charities.

Amendment Nos. 146 and 147, which are similar, relate to the way in which the Charity Commission may apply additional regulations and conditions relating to the issuing of public collections certificates. We completely support the process of issuing national certificates; it seems a good and sensible way to tackle the broader spread of public collections that the Bill puts under the commission’s remit. However, I am concerned that the commission should not get carried away when imposing those regulations or conditions.

We have discussed a number of times the risk that regulations and other provisions might be rather onerous for some charities. In my experience, large organisations would not have much of a problem with the presumably well-intentioned conditions and regulations that might relate to public collection certificates, because they tend to have professional fundraising teams with the time and expertise to look into such matters; indeed, if they are wise—or unwise—the charities might even employ fundraising consultants. The risk is that smaller or middle-sized charities might find it a little difficult; when presented with the regulations, they may begin to think that the exercise is not worth while.

Andrew Turner (Conservative, Isle of Wight)

The hon. Gentleman said that they might employ professional consultants to look into the regulations if they were “wise or unwise.” Does he think it would be wise, or unwise?

Martin Horwood (Liberal Democrat, Cheltenham)

It depends on the consultant.

The risk is to the middling or smaller charities. Reports by the National Council for Voluntary Organisations and the Charities Aid Foundation regularly identify the trend for increasing amounts of income in some sectors to go to the largest charities. There is a distinct squeeze on the middling and smaller organisations which affects their income and their ability to run things like national flag days or national collections. The amendments are designed to counter that squeeze a little and avoid the risk of our adding inadvertently to the pressure on those middling and smaller sized charities.

Amendment No. 148 is similar in intent to amendment No. 139 tabled by the hon. Member for Bishop Auckland (Helen Goodman). Her proposal would delete subsection (1)(e) from clause 53, which gives grounds to the commission to refuse a certificate if it

“appears to the Commission that the amount likely to be applied for charitable, benevolent or philanthropic purposes in consequence of the proposed collections would be inadequate”.

We want to delete from the subsection the words

“having regard to the likely amount of the proceeds of the collection”

and substitute them with

“having regard to all the circumstances”

from the following subsection that refers to remuneration. We tabled the amendment because there were several doubts about whether the Charity Commission could properly judge the likely proceeds of the collections.

The amendment tabled by the hon. Member for Bishop Auckland is braver than our amendment and would remove the provision entirely. On reflection, perhaps that is the simpler and more direct approach. It has a lot to commend it. I would be content if either amendment were accepted. If the hon. Lady wishes to press her amendment to a Division, I might withdraw my amendment.

Joan Humble (Labour, Blackpool North and Fleetwood)

Order. I remind the hon. Gentleman and, indeed, all members of the Committee that they should switch off electronic devices before they come into Committee.

Martin Horwood (Liberal Democrat, Cheltenham)

That was an extremely timely reminder.

The first problem with the clause is the worry that the idea of refusing a certificate on the grounds of the likely proceeds is legitimate. There is no suggestion in the following subsection that fees would outweigh the benefits of the proceeds. It is simply that the charity would not raise as much money as it thought it would. That is the only issue that is relevant to subsection (e). If the charity was employing paid fundraisers it might lose money from the collection and presumably would not want to do it again in those circumstances or at least be disappointed and not want to proceed. It is difficult to see what else the consequences of being allowed to proceed with a collection in such circumstances would be. The Minister is frowning. Perhaps he has an idea of the circumstances.

Ed Miliband (Labour, Doncaster North)

The circumstances might be when the proportion raised for the charity is an extremely small amount of the total proportion raised and most of it ends up going to the fundraiser. Subsection (1)(e) is making that judgment.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful to the Minister, but I do not think that he is right. That situation is addressed by subsection (1)(f), which refers to the

“amount by way of remuneration”

that

“would be excessive, having regard to all the circumstances”.

In other words, it would include the likely proceeds of the collection. The Minister is nodding. Perhaps he would like to intervene.

Ed Miliband (Labour, Doncaster North)

I am actually shaking my head. For the benefit of the Committee, I shall read out the provision. It states:

“that it appears to the Commission that the amount likely to be applied for charitable, benevolent or philanthropic purposes in consequence of the proposed collections would be inadequate, having regard to the likely amount of the proceeds of the collections”.

That is about the proportion being applied for charitable, benevolent or philanthropic purposes relative to the amount not being applied for those purposes.

Martin Horwood (Liberal Democrat, Cheltenham)

I still think that the Minister is wrong; the proceeds, not the proportion, are referred to. In such circumstances, surely the only possible significant cost not being applied for benevolent or charitable purposes—apart from having particularly extravagant collecting tins—would be the remuneration paid to the fundraisers. However, that issue is tackled by 53(1)(f), which talks about balancing remuneration against all the circumstances. That is precisely my point: there are very few circumstances in which one can imagine anything detracting from the donation concerned.

Under either existing charity law or the Bill, any significant proportion being given to some other place would have to be declared at the point of solicitation in any case. As I said, other than the charity simply not raising as much money as it thought it would, it is difficult to see the consequence of issuing a certificate in such circumstances. In most reasonable organisations, the budget heads would be separate in any case; in most cases, 100 per cent. of the money from all public collections would be applied to charitable purposes because it would go into the charity’s accounts. It is very rare indeed for any kind of commission to be taken out en route. Commission is dealt with in paragraph (f); what other costs might there be against the charitable proceeds? Will the Parliamentary Secretary enlighten us?

The second problem with the clause is the word “inadequate”. How will the Charity Commission be able to judge what amount would be inadequate for charitable, benevolent or philanthropic purposes? Payroll-giving collections are often done in workplaces. I am not certain about whether they would be covered, but the point is relevant. In payroll giving, the cost is paid relatively up front and the proceeds only come in on a monthly basis over a long period. In the short term, the costs will almost certainly outweigh the proceeds.

In those circumstances, would the Charity Commission think the proceeds inadequate? Perhaps it might, but in my experience, payroll giving, over time, is one of the most cost-effective forms of fundraising, in common with other forms of fundraising that encourage regular donations over a long time. Henley management centre, which did a calculation of lifetime value, said that if we imagine that the average lifetime value of standing orders generated by face-to-face fundraising was something like £350 to the charity, the overall payback ratio generally achieved was something like 5:1, an extraordinarily good return on the charity’s investment in that fundraising. However, at the moment of solicitation, the fees or remuneration paid might outweigh the immediate proceeds. Indeed, that is quite plausible, as some donors might cancel or not pursue the standing order for very long.

Such issues are difficult. As I know to my cost, it is difficult enough for fundraisers to judge when the proceeds are adequate; it is even more difficult for charity trustees and generalists within the charity to judge, and impossible for the commission to judge in any reasonable way whether the proceeds would be adequate.

The last problem is even more basic: how on earth is the commission to judge the likely amount of the proceeds before the collection happens? If the certificate is being issued for the first time, there is no rational basis on which that could be judged. A lot of fundraising is based on sucking it and seeing—on testing out a particular approach, creative line, presentation of the charity’s case or appeal topic. Until such things were tested, we would not know what the proceeds were likely to be.

There is a multitude of problems with the clause. As I said, I would be content for the amendment tabled by the hon. Member for Bishop Auckland to pass; if it did not, I should want my amendment No. 148 to be passed.

Amendment No. 149 is a probing amendment that would remove clause 57(4). That provision gives the Attorney-General the right to interfere in the deliberations of the tribunal on public collections, but I do not understand why there should be such a right. We have discussed the Attorney-General’s role in other circumstances as being in the interests of beneficiaries, but I am not sure in whose interests it would be were he to interfere in the decision to issue a certificate on a public fundraising collection. The beneficiaries’ interests would not be directly relevant at that point. Perhaps the Minister can give an example.

The group also includes two further proposals from the hon. Member for Bishop Auckland—she has been an active and worthwhile member of the Committee and has produced some excellent amendments. Amendment No. 138 is particularly excellent—I wish that we had thought of it. It applies to clause 51 and takes a fundamentally deregulatory approach. The hon. Lady seeks to combine the process by which people register for the commission and apply for a public collection certificate. Clearly, not everyone would want to do that. There are some trusts that would never contemplate a public collection because they are funded by endowment, and there are charities that would only ever wish to undertake small-scale or local collections—charities which would be exempt from these clauses. For charities that are big enough to aspire to a national certificate, however, the amendment seems extremely sensible.

The hon. Lady has also tabled amendments Nos. 142 and 141. One is very important; the other seems to me to be quite unwise, although the hon. Lady may instruct me otherwise. Amendment No. 142 refers to what I believe is quite a serious mistake in the Bill’s phraseology, though perhaps it is a drafting error. The relevant provision concerns the right of the commission to refuse a public certificate on the grounds that there have been breaches of conditions on previous certificates.

At present, clause 53(1)(i) refers not only to circumstances in which

“it appears to the Commission that the applicant”—

the charity or the person applying—

“has breached any conditions attached to a previous public collections certificate”.

It also refers to circumstances in which

“any person authorised by him”

has ever done that.

Let us take the case of a legitimate national charity such as Christian Aid, which has a huge collection that involves many thousands of collectors. It may inadvertently take on a local fundraiser—let’s call him Michael—whose ideas for collecting were not very legitimate. Perhaps he offered rewards for donations, or suggested that donations be converted into loans, or something like that. That would clearly not be within the rules of Christian Aid collections, and quite possibly it would have be a breach of the certificate. It would be quite right for Christian Aid not to employ that person as a fundraiser again, nor use his services as a volunteer. However, the clause would allow the Charity Commission to use that person’s conduct as a basis on which to refuse Christian Aid a public collection certificate for Christian Aid week.

In practice, Christian Aid would never be denied a certificate on such grounds, because it is one of those big, well-resourced national charities that would be able to argue its case effectively and would never really be at risk. However, the provision presents much more risk to a smaller and less sophisticated charity which might not be able to argue its case so well and in which an individual collector would be more significant.

I am not sure that deleting the provision is quite the right approach. The clause appears to have a legitimate intent—to extend the commission’s power to refuse a certificate not just to a charity as a whole but to someone continually employed by the charity who breaches the certificate’s terms with the charity’s knowledge. It is legitimate for the Bill to address that, but the clause as drafted does not do it well. It opens up the possibility of serious abuse.

I move to Amendment No. 141, tabled by the hon. Member for Bishop Auckland. Currently, the commission may withhold a certificate if it is not satisfied that the charity has acted with due diligence

“to secure that persons authorised by the applicant to act as collectors...were”

or are

“fit and proper persons”.

That is a sensible and important power for the commission to have. I am puzzled by the hon. Lady’s amendment, and seek her clarification.

Helen Goodman (Labour, Bishop Auckland)

May I say what a pleasure it is to see you in the Chair again, Mrs. Humble?

The section on public collection certificates is obviously designed to even out administration throughout the country of collections by charities. I understand the problems that it is intended to address. However, its drafting risks making the process extremely bureaucratic and inefficient, and my amendments drive at that possibility. It must be efficient and impose a minimal burden on both charities, so that they need not spend a lot of time on it, and the Charity Commission, which as we have learned will not receive a vast injection of resources to perform its new functions.

Amendment No. 138 suggests that we pull together the two processes. I checked with the Charity Commission yesterday to find out the situation on annual returns. It told me that every year, it writes to all charities with an income under £10,000 to check that they still exist. Then it has different forms depending on whether a charity’s income is between £10,000 and £250,000, between £250,000 and £1 million or more than £1 million. The forms are quite long—between 12 and 22 pages, although most of that concerns the information that the commission is seeking about trustees.

I am making two simple suggestions: the request for a public collection certificate should be added at the back of the form, so that nobody has to get involved in two processes that they could easily forget, and the information on both processes should be kept together.

My amendment No. 140 to delete clause 55 is not on the order paper, but I would like to explain here and now why I proposed it, in order to save time. Clause 55 is designed to provide a separate process if a charity’s trustees change. Although the public collection certificate lasts for five years, a charity will need a new certificate if its trustees change.

As we all know, the trustees of medium and large charities do change. They are regularly turned over. Every year, there probably someone new involved in a large charity. Rather than having another process which will mean that the public collection certificates do not last for five years but in practice for only one year, we can cut out an entire clause and an administrative process—given that charities do say who their new trustees are in the annual return—by wrapping up the two processes together.

Andrew Turner (Conservative, Isle of Wight)

That sounds an enticing prospect. However, would the hon. Lady tell me if the form on which one notifies changes of trustees is retrospective or is one required to notify a change of trustees at the time it takes place? If so, would the public collection certificate have expired by virtue of the change of trusteeship before the notification was received by the commission?

Helen Goodman (Labour, Bishop Auckland)

As drafted here, the public collection certificate would be invalid if the trustees had changed. As the hon. Member said, the annual return is one in which what has happened in the previous year is reported. That degree of propriety is not one that we could operate in practice. Therefore I am suggesting that it is run in a different way and that a subsequent change would be reported and regarded by the Charity Commission as adequate.

I am concerned that the administration of that must be smooth and up to snuff from the beginning. It would be helpful if the Minister would say, for example, how many charities he thinks will use that and what the capacity of the Charity Commission will be.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful to the hon. Lady for her remarks on clause 55. I guess that we might be able to discuss that as a stand part amendment and therefore we may return to it. In the meantime, it would be useful to distinguish between the holders of the certificate and all the trustees of the charity. I am not sure that the two are necessarily the same and that every change of trustee would have to be notified in those circumstances. Would she, as I would, welcome the Minister clarifying that when he comes to make his remarks?

Helen Goodman (Labour, Bishop Auckland)

Yes. My understanding is that they were one and the same. I am sure that the Minister will be able to explain if that is not correct.

The other point that we need some clarity on is the speed of turnaround on those public collection certificates. It is important that that is a speedy process. The reason that this needs to be effective and not to have teething troubles from the beginning is that, as all hon. Members will be aware, many voluntary organisations run on tight margins. If, due to this system not working, their fundraising is messed up for three or six months, some of them could go under. That would be unfortunate and not at all our intention in passing the legislation.

Joan Humble (Labour, Blackpool North and Fleetwood)

Order. May I point out to the hon. Lady that she is discussing matters that could properly be debated under a stand part debate under clause 55? By debating those matters now, she may be denying herself—and other hon. Members who may wish to comment—the opportunity to do that in a stand part debate on that particular aspect of the matter.

Helen Goodman (Labour, Bishop Auckland)

Thank you, Mrs. Humble. I will not say anything about my amendment No.139 because the hon. Member for Cheltenham (Martin Horwood) has more than adequately exposed all the matters on that. However, I look forward to hearing from the Minister on that point.

Turning to amendments Nos. 142 and 141, I had in mind the same situation described by the hon. Member for Cheltenham. As well as Christian Aid, I am aware that Amnesty International follows a similar process. They send out packs to their supporters and give them rules as to the way in which the collection should be conducted. The supporter then collects the money and sends it back.

There is concern about clause 53(1)(h)(i) and (2)(b)(i). We should put obligations on voluntary sector organisations only if they can carry them out, and it is unrealistic to think that a large organisation can check all the people who support it. Clause 53(1)(h)(i) is backward looking, so the commission might be able to prevent somebody who had caused a problem in the past from collecting again. Paragraph (b)(i), however, is forward looking, and that is totally unrealistic. No organisation can simply rely on its existing supporters and collectors, and it must always be looking for new ones. That is why I am also concerned about the forward-looking due diligence provision.

Ed Miliband (Labour, Doncaster North)

We have not heard from the hon. Member for Isle of Wight, who is normally a voice of reason on such matters. However, the amendments are important, although I shall try to deal with them briefly because we have already been discussing them for half an hour.

The overall point that I should make relates to public confidence. We are attempting to strike the right balance by ensuring that there is sufficient regulation of public collections—so that there is public confidence in the fact that charities are raising money in a legitimate way for legitimate purposes—but that such regulation does not, as the hon. Member for Cheltenham and my hon. Friend the Member for Bishop Auckland said, place undue burdens on charities.

Amendments Nos. 146 and 147, which stand in the name of the hon. Member for Cheltenham, meet the criteria of the aforementioned Cheltenham principle and are unnecessary. Amendment No. 146 would add the words

“although not in a form that might reasonably discourage legitimate applications”

and, to be honest, it is not one of the hon. Gentleman’s best efforts. The commission clearly will not want to discourage legitimate applications. It is committed to making the application process as straightforward and as easy to use as possible. It intends to publish accessible and readily understandable guidance to explain its approach to issuing certificates. That is clearly a new responsibility for the commission and it will be a big test for it as a modern regulator. The commission will want to carry out that responsibility in a way that helps charities to go about their purposes. The amendment is therefore unnecessary.

Amendment No. 147 makes a more important point, which it is worth explaining. The part of clause 52 to which the amendment relates allows the commission to attach conditions to any public collection certificate that it issues. That might sound as if it will be onerous for the charity and to the detriment of collection, but it might in fact facilitate the making of collections. The ability to attach conditions will enable the commission to issue a certificate where it might otherwise have to refuse one—for example, if applicants have been unable to supply all the information required. The commission might issue a collection certificate, but with the requirement that the information that has not been provided is quickly forthcoming. If that part of the clause did not exist, the commission might need to refuse a certificate.

Martin Horwood (Liberal Democrat, Cheltenham)

The Minister may be misunderstanding my amendment. There is no intention to delete the clause, and I am quite content for the kind of conditions that he is describing to apply. I simply want to add to the Bill so that it states that conditions should not be in a form that might reasonably discourage legitimate applications, even inadvertently. I want that clear direction to be given to the commission.

Ed Miliband (Labour, Doncaster North)

The hon. Gentleman makes a fair point, but I am trying to explain the purpose of issuing conditions in order to correct the impression that this is about a horrible beastly commission imposing lots of horrible beastly conditions on nice saintly charities. That is the impression that he has given. Having said that, if the charity was under investigation, the commission might need to ask for a certificate of accounts in relation to the collection in order to understand the nature of the collection that took place. The amendment is unnecessary. The commission will not want to attach conditions in a form that might reasonably discourage applications. I hope that the hon. Gentleman will withdraw the amendment.

Amendments Nos. 139 and 148, tabled by my hon. Friend the Member for Bishop Auckland and by the hon. Member for Cheltenham respectively, concern the power of the commission in clause 53(1)(e) to make a judgment about the amount likely to be applied for charitable purposes. Again, we are talking about public confidence. It might interest the Committee to know that this power already exists under the House to House Collections Act 1939 and lies with local authorities, which have to make a judgment about whether the amount likely to be applied will be adequate or inadequate. We believe that it is not correct for local authorities to have that in their powers; it is not a matter for them.

Why is this provision necessary? Let me give an example that might help the Committee. It relates to an investigation conducted by the commission in 2001 concerning the Renal Care and Research Association Ltd. It was found that although that organisation had raised more than £1 million, only £74,000 was paid in the form of grants to kidney research bodies—only 7 per cent. of the total funds raised. If the commission encountered an organisation with such a track record, it would be advisable for it to be able to think about refusing a certificate, on the grounds either of excessive remuneration or of insufficient return to the charity. Obviously, the provision has to be applied with a light touch and I am pretty confident that it will be, but not to have this function, which already exists, would take away from the commission the power to uphold public confidence. The amount of money that is used for charitable purposes relative to the amount that comes in from fundraising is an issue, so it is right to have the function.

Martin Horwood (Liberal Democrat, Cheltenham)

There are a number of problems with what the Minister is describing. First, it is difficult to discuss the renal charity, as we are not really aware of the facts of the case, but if I am right it applies to much more than public charitable collections. It seems to refer to the proportion of its funds that it applied to the specific function of renal research or whatever it was, whereas the clause refers to

“charitable, benevolent or philanthropic purposes”.

That can include non-research. Virtually all the activities of a charity, apart from occasional trading activities, must be charitable by law. Any money that goes to the charity is, almost by definition, “charitable, benevolent or philanthropic”.

The only circumstance when the clause might apply is when some moneys are taken out of the process of collection and given to some other purpose, not to the charity itself. The obvious one is remuneration but, as I keep saying and the Minister mentioned it again, that is dealt with in the subsequent subsection. So what is the mystery cost that is being taken out in the clause? What are the circumstances in which moneys might be mysteriously extracted from the collection and given to a non-charitable purpose?

Ed Miliband (Labour, Doncaster North)

I think the hon. Gentleman is slightly confused because the phrase,

“charitable, philanthropic or benevolent purposes”,

is not about a charity itself. It is about charities and non-charities—that is, those with “philanthropic and benevolent purposes” will be able to apply for a public collections certificate. That is the marginal point and I want to address the substantive point.

There are other costs as opposed to the costs of paying a fundraiser. For example, expenses might be payable to volunteer fundraisers, for fundraising materials, or for transport costs associated with the process of fundraising. Other costs might apply outside the specific issue of the costs of the fundraiser.

Andrew Turner (Conservative, Isle of Wight)

One reason I did not speak earlier was that I wanted to hear the Minister’s explanation and, frankly, I do not think it was very good. Money that is spent on flags, collecting tins, transport or expenses for volunteers is just as much charitable as money spent on fundraisers. That is what the NSPCC told me when I asked how much it spends on fundraising. If it were not charitable, it would unlawful to collect at all because all the proceeds of a charitable collection, by its nature, must be given to the charity or the charity is barred from undertaking the collection by virtue of its objectives.

Ed Miliband (Labour, Doncaster North)

I do not think the hon. Gentleman is right. My understanding of

“it appears to the Commission that the amount likely to be applied for charitable, benevolent or philanthropic purposes in consequence of the proposed collections”

is that it does not apply to the costs of fundraising materials, fundraisers, expenses payable to volunteer fundraisers, transport costs and so on.

Martin Horwood (Liberal Democrat, Cheltenham)

I am certain that the Minister is wrong. I have been a director of fundraising and I believe that all my activities were charitable because I could not have been employed by a charity to carry out those activities otherwise. The payment of expenses to volunteers and all the costs he regards as legitimate if they are paid by the charity are bound to be charitable. Again, I ask him: what are the mystery costs, apart from remuneration which is dealt with in the next clause, that would be taken out of the charitable collection itself? That is the only circumstance in which the provision could possibly apply.

Ed Miliband (Labour, Doncaster North)

There are two possible reasons for objecting to this paragraph. One is that the costs that I described could properly be regarded as charitable, which is the point made by the hon. Member for Isle of Wight and half of the point made by the hon. Member for Cheltenham. The other is that the costs are somehow described fully in paragraph (f).

I am convinced that I am right about this and that the costs that I described do not fall under the provision in paragraph (e) which refers to

“charitable, benevolent or philanthropic purposes in consequence of the proposed collection”—

Martin Horwoodindicated dissent.

Ed Miliband (Labour, Doncaster North)

The hon. Gentleman shakes his head, but I think he is wrong. If I am right—I think the Committee will have to take my word on this—is there an issue here?

Let us suppose that there was a collection for an earthquake in Iran, and £100 was raised, of which £10 went to help with the earthquake victims and £90 went to the charity for its expenses and associated costs; are we really saying that in such a scenario £100 would be considered to have been applied for charitable, benevolent or philanthropic purposes in consequence of the proposed collections, and that this part of the clause is therefore unnecessary? I contend that that would be the wrong position to take.

Martin Horwood (Liberal Democrat, Cheltenham)

The Minister is wrong on two counts. First, when the £100 is received, it is not then divided between expenses and charitable purposes. Even if his narrow interpretation of charitable purpose is correct, the money is inevitably given to the whole charity. It is never divided in the way that he describes, but becomes part of the whole charitable income of the charity, which is then divided between fundraising expenses and direct charitable purposes according to the SORP regulations.

Andrew Turner (Conservative, Isle of Wight)

SORP is guidance.

Martin Horwood (Liberal Democrat, Cheltenham)

I am corrected by the hon. Gentleman. The expenses and expenditure of a charity is then divided. At no stage would the pennies given into a collecting tin or the income from a standing order be divided in the way that the Minister describes. That simply does not happen. All the proceeds from such collections go to the whole charity.

Joan Humble (Labour, Blackpool North and Fleetwood)

Order. Again, I remind the hon. Gentleman and other hon. Members that interventions should be brief.

Ed Miliband (Labour, Doncaster North)

I am sorry that we did not get to hear the hon. Gentleman’s second point. We will have to agree to disagree on this. However, unusually for him, he is not living in the real world on this point. The real world concern is that if money is raised for a particular appeal, a significant proportion of that money should go towards—

Martin Horwoodrose—

Ed Miliband (Labour, Doncaster North)

If the hon. Gentleman listens for a minute, he can then intervene. He should have a bit of patience. People think that we should be assured that a significant proportion of money raised will go to the relevant appeal. That is the long and short of this part of the clause. The hon. Gentleman may claim and believe, with his wisdom and expertise as a former “Ã1/4berchugger”, that his understanding of the clause is far better than that of the Government’s whole legal team, but we believe that he is wrong on this. However, I give way to him again.

Martin Horwood (Liberal Democrat, Cheltenham)

I shall attempt to be brief. For the record, I have never done chugging, and I have lived in precisely that real world for 20 years, and venture to suggest that I may well know more about it than the Government’s legal team.

The second point that I was going to make is relevant. Even with the ratios that the Minister describes being applied to the direct charitable purpose, it still might be worth the charity recruiting that donor, because, over time, as the Henley Centre figures suggest, that donor might be worth hundreds of pounds more. They might ultimately leave a legacy and be worth thousands, or even hundreds of thousands, of pounds to that charity. That brings me to a point that I made earlier about the Charity Commission’s inability to judge what is adequate and what is likely income.

Ed Miliband (Labour, Doncaster North)

The hon. Gentleman has moved partially back to the real world with that intervention. He asks how the Charity Commission will judge what is inadequate. Obviously, it would consult fundraisers and charities to establish a benchmark, but it is important to note—this might reassure the Committee—that the commission would not refuse a certificate for a first collection where the applicant has no track record. The point of the measure is precisely to ensure that, in cases in which there is a track record of large sums being raised but not being put to the specific purposes for which they were raised, the Charity Commission should be able to make a judgment. The power exists in legislation; it is a power of local authorities. It is rarely used in the particular ways that I have talked about and I suspect that it will be rarely used in the future, but it is an important power for the commission to have.

That brings me to amendment No. 142, tabled by my hon. Friend the Member for Bishop Auckland, concerning the question of a fit and proper person and

“any person authorised by him”.

Her concern is about the possible constraints that could be placed on legitimate fundraising. I want to offer her some reassurance, because it is necessary that a fit-and-proper-person test exists. This next point might be of interest to the Committee. The need for there to be due diligence to ensure that the fit-and-proper-person test is passed already exists in legislation—in the House to House CollectionsAct 1939.

Again, I think that there is a public confidence issue. I do not think anyone is saying that Christian Aid, with its 250,000 collectors, must undertake high-level scrutiny of every collector, but there may be some basic requirements that it is worth ensuring are made. One such example might be that a collector signs an undertaking that they have no unspent conviction; it might be something very basic. I need to reassure the Committee that I do not think that this will be an onerous or arduous set of requirements, but it is important to have them in place.

Helen Goodman (Labour, Bishop Auckland)

Is the Minister suggesting that, as part of the due diligence test, all collectors should sign a form saying that they do not have any kind of unspent conviction? I thought that one thing we were trying to do was to rehabilitate offenders and help people who have had difficult lives, and that one of the routes for doing that was through the voluntary sector. I hope that he is not, inadvertently, imposing a new condition.

Ed Miliband (Labour, Doncaster North)

I definitely do not want to impose conditions and it would not be for me to do so. The Institute of Fundraising has guidelines on what a test of being fit and proper should be for collectors, and we can rely on it to offer us a way forward on this. I do not think that there is an issue in this regard.

That takes me on to my hon. Friend’s worry about clause 53(2)(b)(i), which relates to the due diligence test overall. I may have not completely understood what she was concerned about, but her amendment would remove the fit-and-proper-person test completely. I am happy to give way to her if she would like to be more specific.

Helen Goodman (Labour, Bishop Auckland)

What would an organisation such as Christian Aid, which as the Minister says has 250,000 collectors, have to do? When he has explained that, we may be in a better position to judge the reasonableness of what it has to do.

Ed Miliband (Labour, Doncaster North)

As I say, the judgment will have to be made in consultation with the Institute of Fundraising and others. The issue is not about imposing large obligations on lots of different collectors. I want to reassure my hon. Friend about that. The risk is not necessarily associated with the largest organisations, but if there is not a fit-and-proper-person test in the Bill, we will be left open to the charge of undermining public confidence in charitable collections. I shall be happy to have the Charity Commission circulate to Committee members before Report a sense of how it intends to apply the test. I hope that that reassures Committee members.

On amendment No. 138, tabled by my hon. Friend, I am sympathetic to the idea that we must find a way to ensure that the process of applying for the public collection certificate—I said it was a test of the commission—is non-bureaucratic. The problem with the amendment is that registration happens only at the point of formation of the charity. She suggests combining registration and application, but I am not sure that registration is the answer.

My other point to my hon. Friend, which answers a question that she posed to me, is that in the regulatory impact assessment, 8 to 10 per cent. of charities were estimated as likely to apply for public collection certificates. The problem with combining an annual process with registration for a public collection certificate is twofold: first, only a small proportion of charities may want to apply for them, so the danger is that we will lengthen the form for all charities, even though only a minority will apply for the certificate; and secondly, the certificate is issued for five years rather than one. My hon. Friend shakes her head, and I am happy to give way to her.

Helen Goodman (Labour, Bishop Auckland)

I know that that is the formal position, but is the public collection certificate held by the organisation or by the trustees? Although the Bill says that the certificate should last for five years, the Minister will find that if the certificate is held by the trustees, they will have to go through the whole process set out in clause 55.

Ed Miliband (Labour, Doncaster North)

In the case of an incorporated charity, the certificate is held by the charity as a corporate body; in the case of unincorporated charities, it is held by an individual trustee, a number of trustees, or, if there is a fundraising director, by the fundraising director. Clause 55, which we may come to, exists precisely to provide an easier method of transferring the certificate. We must face up to the fact that there is an issue with unincorporated charities. The fact that they have to re-register their trustees each year if their trustees change is precisely a facet of the constitutional nature of unincorporated charities.

My hon. Friend has raised an important issue, but it is not one of deep principle. I undertake to talk to the Charity Commission about how best it can come up with a non-bureaucratic process. If it can be combined with an annual process, it should be, although I have raised some doubts about why that may not be possible. I understand that the form will be downloadable from the commission’s website. The general issues that my hon. Friend has raised are completely right.

Finally, I want to go back to the hon. Member for Cheltenham and his concerns about the Attorney-General. Amendment No. 149 would affect a traditional and rather underused role—I do not think it should worry the Committee—of the Attorney-General as friend of the court and protector under the Crown of charities. It would be possible to remove that right from the Attorney-General, but I do not think that it would be desirable. The power will be used extremely rarely, but it is sensible to leave it in the legislation.

Martin Horwood (Liberal Democrat, Cheltenham)

As regards a number of the amendments, the Minister has made reassuring statements about the intent of the Charity Commission and of the Bill. I suppose we will have to trust his good and generous soul and the practice of the Charity Commission. I hope that the practice follows the theory that he has set out. The proof of the pudding will be in the eating, and we shall have to review that in due course. On those grounds, I might seek leave to withdraw amendment No. 146 and I would be content to see others not pressed.

Amendment No. 38, tabled by the hon. Member for Bishop Auckland, sets out a legitimate, and cost and regulation-saving, process.

Helen Goodman (Labour, Bishop Auckland)

I am grateful for the kind words from the hon. Gentleman. I think that the Minister was saying that the amendment was technically defective because I had confused the registration process with the annual return process. Had I written in the annual return process, I think that it would have been a better amendment.

Martin Horwood (Liberal Democrat, Cheltenham)

I am sure that the hon. Lady is absolutely correct, and so I am reassured on that front, too. It would be the wish of the whole Committee to see the Minister address the issue of combining the annual return with the application for a certificate. The fact that the time scales might be slightly different does not rule out the possibility of combining the two on one form. It simply would not be necessary for people to fill in both parts on every occasion.

On amendment No. 148, which is similar to amendment No. 139, my concerns are still there and nothing that the Minister has said has reassured me that he is being advised about the real world. The impossibility of the commission being able to judge what is adequate has been almost underlined by the fact that he made comments about a ratio of income to expenditure that would be perfectly legitimate if it was justified by the future income.

The Minister is looking disparagingly at his notes, but public collection certificates will apply to standing orders. The standing order might be for as little as two or three pounds a month. At the point of solicitation, it is quite clear that if a paid fundraiser was involved, the costs would vastly outweigh the income or the amount being applied to the charitable purposes of the charity. Over time, that amount would build up, which is why standing orders are a popular form of fundraising, and would give the donor the opportunity to give more and to give to emergency appeals. The Minister shakes his head, but I invite him to tell me where I am going wrong with that scenario.

I have had responsibility for tens of millions of pounds of charity income that was derived from precisely that source. Those regular standing orders build up over time and form an enormously valuable and cost-effective source of income for major and smaller charities. Sometimes they can lead to legacies worth hundreds of thousands of pounds—and occasionally millions of pounds—that can make the recruitment of a donor to a good cause an extremely worthwhile process, even if at the very moment of solicitation the ratio does not appear to be very beneficial for the charitable purpose. That is a difficult judgment call for even professional fundraisers to make. One must take into account all sorts of aspects, such as what used to be called in the jargon the attrition rate—that is, the likelihood of donors falling out of the standing order relationship at a future date. Those rates and ratios change from year to year, as the nature of fundraising and the popularity of different fundraising methods change.

It is incredibly difficult to see how the commission could ever have the expertise to judge what an adequate application of the funds to a charitable purpose was or what the likely amount of the proceeds from a collection would be, because those are difficult enough for the fundraisers to judge themselves. For the commission to have the right to refuse an organisation a certificate on that basis seems a dangerous step. I support amendment No. 139, which stands in the name of the hon. Member for Bishop Auckland and I should like to press amendment No. 148 to a Division should the opportunity arise.

On amendment No. 149, which stands in my name, the Minister has explained that the Attorney-General will be acting in the traditional role of protector of charities. All I can say is that charities are lucky to have so many protectors in the Bill. It seems a strange argument to say that we should support the clause on the grounds that it will almost never be used; nevertheless, I bow to the Minister’s greater legal expertise. I shall not press amendment No. 149 to a Division but, bearing in mind my remarks about amendment No. 148, I beg to ask leave to withdraw the amendment.

Clause 53

Clause 60

Helen Goodman (Labour, Bishop Auckland)

I know that my amendment No. 143 has not been put on the selection list, but I wonder whether the Minister could clarify how clause 60 will work. Professional fundraisers are concerned that, because it is so tightly drafted, from time to time in some places, it would be possible for a local authority to restrict fundraising to two days a week. Is he aware of that, and could he and the lawyers examine the technical drafting of the clause before it comes back on Report?

Joan Humble (Labour, Blackpool North and Fleetwood)

Before I call the Minister, could I point out to the hon. Lady that her amendment was grouped with amendment No. 144? As we have had the debate on the amendment, I would ask the Minister to respond to the clause stand part debate.

Ed Miliband (Labour, Doncaster North)

I will be brief. My hon. Friend was lucky enough to be let off at 6 o’clock on Tuesday. She will see from the record that I spoke in some detail about the issue, but I would be happy to discuss it with her outside the Committee.

Clause 63

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move amendmentNo. 153, page 69, line 5, leave out ‘or (3)’.

Joan Humble (Labour, Blackpool North and Fleetwood)

With this it will be convenient to discuss amendment No. 154, page 69, line 5, leave out ‘or (b)’.

Martin Horwood (Liberal Democrat, Cheltenham)

Amendment No. 153 is consequential on amendment No. 154, which seeks to leave out the words “or (b)” that refer to subsection (1)(b), which deals with regulations that the Secretary of State may make

“for the purpose of regulating the conduct of public charitable collections”.

We do not seek to delete the paragraph—it is an important part of the structure of the clause as a whole—but we seek to remove the reference in subsection (4) to its generality not being restricted by anything else in the clause. In effect, the amendment would restrict the power of the Secretary of State to make regulations willy-nilly in whatever way he chose.

Although we trust that the Secretary of State and his parliamentary colleagues are generous souls, it seems that subsections (2) and (3) set out a comprehensive and legitimate list of the matters that may be prescribed by regulation, and the provisions that may be made. They refer to such sensible things as the areas in which the appeal can be conducted, the keeping of accounts and the prevention of annoyance to the public. I question whether the Secretary of State needs much wider powers, as granting them makes almost superfluous the powers granted in subsections (2) and (3).

Ed Miliband (Labour, Doncaster North)

Believe it or not, Donald Rumsfeld is able to help us. He talked a few years ago about known unknowns. He said that we know that there are some things that we do not know. The hon. Member for Cheltenham asks a legitimate question. He wants to know what it is that might not be contained in subsections (2) or (3) for which the Secretary of State would want to prescribe regulations. The truth is that we do not know. If we knew, it would be included. The question is therefore why we need the power.

The hon. Gentleman was formerly involved in the process of public fundraising, if not as an “Ã1/4berchugger” as I alleged earlier. He will know that we need the power because the way in which public fundraising takes place is rapidly changing. For instance, direct debit fundraising essentially did not exist 10 years ago. The only reason for these provisions is that they provide for flexibility in the prescribed regulations, so that if the process of public fundraising changes and it is thought to be necessary to take action in order to preserve public confidence on matters that fall outside subsections (2) and (3), we will have the flexibility to do so without recourse to primary legislation.

As I say, I cannot describe the ways in which public fundraising might evolve, or what regulations might be necessary; if I could, they would be defined in subsections (2) and (3). I know that that makes life rather difficult, but even if my observations included mention of Donald Rumsfeld, I hope that the hon. Gentleman will withdraw the amendment.

Martin Horwood (Liberal Democrat, Cheltenham)

I cannot help thinking that hon. Members and those in another place may have enormous fun reconstructing the Minister’s suggestion that known unknowns should be the proper basis for legislation, and citing Donald Rumsfeld as an authority. He might find that lawyers will challenge the idea that it is a proper basis for legislation. I certainly would. However, I am somewhat reassured that his intent is benign.

Although the Minister’s reference to fundraising being a fast-moving discipline is right, public charitable collections are probably the least fast moving of all. The way in which fundraising is done—whether with cash, direct debits or standing orders—may have evolved over the past 10 or 15 years, but the nature of public collection itself has hardly changed in 100 years. Nevertheless, I beg to ask leave to withdraw the amendment.

Joan Humble (Labour, Blackpool North and Fleetwood)

Opposition Front Benchers have said that they would find it convenient to combine the debates on clauses 67 and 68 and the amendments to them accordingly.

Clause 67

Andrew Turner (Conservative, Isle of Wight)

I beg to move amendment No. 128, page 71, line 14, at end insert—

‘(6) After subsection (9) insert—

“The Charity Commission shall have power to initiate criminal proceedings in respect of offences under subsection (9).” ’.

Joan Humble (Labour, Blackpool North and Fleetwood)

With this it will be convenient to discuss the following: Clause stand part.

Amendment No. 131, in clause 68, page 73, line 22, at end add—

“60C Fundraising by sale of products and services

(1) Save in the case of small outlets, where the sale of any goods or service is represented as benefiting a charity or charities, the vendor shall indicate either the proportion or the amount of the sale price which will be passed to the charity or charities for their unrestricted benefit.

(2) Indications under subsection (1) above may be made in diagramatic form, and shall be made in writing, the font-size of which shall be no smaller than the price of the goods or service.

(3) For the purpose of this section, a “small outlet” is an organisation which is not obliged to register for Value Added Tax purposes.”.’.

Clause 68 stand part.

Andrew Turner (Conservative, Isle of Wight)

When we arrived this morning, it was fair to say that the sun had got his hat on and we all hoped that later on we could come out to play. The sun has, I am afraid, taken his hat off and hidden behind a cloud. Let us hope that he comes out again later. It is pleasing to see you, Mrs. Humble, once more in your place, if only for a few more minutes.

I am grateful that the two clauses have been brought together because that will make for a shorter debate. I give notice that I might wish to press amendment No. 131 to a Division.

Amendment No. 128 gives the Charity Commission the power to initiate criminal proceedings in respect of offences under subsection (9). The reason for that is that in the past—there are a number of specialised offences here—the Charity Commission has had the power to take action against charities. However, it was not necessarily the charities who were offending. Sometimes an organisation that is not a charity purports to be one. The provision would give the Charity Commission the power to enforce criminal sanctions in respect of clause 60 of the Bill. That may not be the most appropriate body for the task; it might be appropriate for sanctions to be enforced by trading standards or a similar organisation. That is by nature of a probing amendment and I will welcome the Minister’s view on that.

Amendment No. 131 is a requirement for information to be given, when goods or services are offered for sale purportedly for the benefit of a charity, about the amount of money that is going to that charity. It adds a new section 60C to the 1993 Act. It exempts small outlets. I can see the hon. Member for Bishop Auckland shaking her head. I am sure that we will have an interesting debate on that.

Christmas cards are one example of goods that are quite frequently offered for sale, supposedly for the benefit of charity. I refer to a 5 November report from The Guardian. It is relevant that it is Guy Fawkes night on this day of all days. Hon. Members might wish to consult the Guido Fawkes blog to find out more about why I have said that. However, The Guardian said:

“Britain’s high street retailers are selling charity Christmas cards which give as little as 4p in every £1 to good causes. A survey by Guardian Money reveals that John Lewis Partnership and Fenwick as the stores which give least, with one card on sale in Fenwick’s swanky Bond Street store”—

it has descended to the level of The Sun in that—

“giving just 1p to an arts fund...Card Aid...names John Lewis as ‘Scrooge of the year’. Clinton Cards topped the survey by promising to pass on 25 per cent. of the (pre-VAT) price on its charity cards.”

That is a matter of some concern. How much money from a service or a good that is offered for sale by a high street outlet—although not only a high street outlet and I have specifically exempted small outlets—goes to charity?

In 2004, the average charity Christmas card sold for 64p of which only 5p went to charity. Boots have a standard flat rate of 10p—

Standing Committee A

Roger Gale (Conservative, North Thanet)

Good afternoon, ladies and gentlemen. Before we proceed, I understand that having decided not to sit on Tuesday evening the Committee is now considering sitting later this evening. That, of course, is entirely in order and I am perfectly happy to take the Chair, as I am at the service of the Committee. Mrs. Humble, however, is not available. That being so, if we run past a certain point—and it will be the Chairman who will decide when that point is—I shall suspend the Committee in the interests of the comfort of both the staff and, dare I say, myself.

Clause 67

Roger Gale (Conservative, North Thanet)

I remind the Committee that with this we are taking the following: Clause stand part.

Amendment No. 131, in clause 68, page 73, line 22, at end add—

“60C Fundraising by sale of products and services

(1) Save in the case of small outlets, where the sale of any goods or service is represented as benefiting a charity or charities, the vendor shall indicate either the proportion or the amount of the sale price which will be passed to the charity or charities for their unrestricted benefit.

(2) Indications under subsection (1) above may be made in diagramatic form, and shall be made in writing, the font-size of which shall be no smaller than the price of the goods or service.

(3) For the purpose of this section, a “small outlet” is an organisation which is not obliged to register for Value Added Tax purposes.”.’.

Clause 68 stand part.

Andrew Turner (Conservative, Isle of Wight)

It is a great pleasure to see you in your place, Mr. Gale. Let us hope that we will not see you there for long.

The last words I used before we broke for lunch, although lunch is only a fleeting hope in the minds of most members of the Committee, were “10 pence”. I apologise; I should have said 10 per cent. Boots has a standard rake-off—or return—to charities of 10 per cent., but that varies hugely from outlet to outlet.

I am pleased to say that during the break I was able to discuss with the Parliamentary Secretary the purport of the amendment. He has assured me that clause 67(4) has the effect of tightening the law currently set out in section 60(3) of the Charities Act 1992. The 1992 Act states that “any commercial participator”—I had not understood that that meant a shop such as Clinton Cards—that makes any representation that

“charitable contributions are to be given to or applied for the benefit of one or more particular charitable institutions,”

is obliged to make a statement, which is broadly in accordance with the effect of my amendment. I am deeply concerned by the apparent failure of even respectable outlets such as Boots, Tesco and Marks and Spencer to recognise that duty under the law, but I am pleased that the Government propose to tighten the provision.

I shall now move on to what might have been a stand part debate on clauses 67 and 68, which again has benefited from discussions over lunch. I have received representations from the Association of Fundraising Consultants that the existing law, particularly section 60(2) of the 1992 Act, is not working effectively. The association’s solution is to reduce the impact of that law and to set aside the changes that the Government propose to make to that section of the Act.

People are genuinely concerned about how much of their money is spent on fundraising. A lot of people say, “Well, it’s all charity money,” and—to revert to an earlier debate—in law, of course, it is all charity money, because it is there for the charities to dispose of in whatever way it wishes, as long as it is for the general charitable purpose. None the less, people are concerned about fundraising and the amount of money that may be devoted to it by certain charities. Some charities spend as little as £300 to raise £10,000, whereas some spend in excess of £900 to raise the same sum. On average, it is the largest charities that have the worst return on money spent on fundraising, and the smallest charities that have the best return on the money that they invest. That offers a lesson: people are entitled to know how much of the money is being spent on what might be described as a job creation scheme for professional middle classes, and how much of it will genuinely help real people at the front line, which is, after all, the purpose of most people’s charitable giving.

I have a lot of sympathy with the suggestion of the Association of Fundraising Consultants that the amendments to the 1992 Act proposed in the Bill would not have the effect that the Government desire, because they would not be sufficiently robust to stand up against the wide range of different ways in which professional fundraisers are funded. However, the principal point made by the AFC is that charities, and charity trustees in particular, should have a clear responsibility for deciding how effectively money is spent on fundraising. That is my position, also.

I am grateful to the association for the information it has provided. I fear that neither the existing provisions, nor the proposed provisions will be good enough for what the Government want to achieve and, I suspect, what most people want to achieve, which is to ensure a high rate of return on money spent on fundraising. We are not getting that from the largest charities at the moment.

Martin Horwood (Liberal Democrat, Cheltenham)

It is a pleasure to see you in the Chair, Mr. Gale. Some of the statements that have just been made by the hon. Member for Isle of Wight (Mr. Turner) contained so many red herrings that he could open a fish shop. Despite my background, I shall not take his pejorative statements personally, especially his comments on fundraising by the larger charities, which the Parliamentary Secretary described from a sedentary position as an outrageous slur. I have to concur.

The hon. Gentleman was wrong about many things. The ratio of expenditure to income is important and it is dealt with properly by most of the larger charities. According to the type of fundraising pursued, those ratios sometimes look worse and sometimes look better. The areas that benefit from a large volunteer input, which is, in effect, free naturally achieve a good ratio; that is often true of small charities, as the hon. Gentleman rightly pointed out. However, some small charities indulge in special events fundraising of the type that is relatively inefficient, such as large gala dinners that make only a little more than they cost to put on. Such issues are a matter of detail and variation throughout the whole charities sector and his wild generalisations were pretty wide of the mark.

I do not have huge sympathy for the case putby the Association of Fundraising Consultants. The importance of the clauses designed to strengthen section 60 of the 1992 Act arises from the fact that weaknesses have been identified in the application of that provision. The hon. Gentleman was right to mention charity Christmas cards. The issue is not the costs that are taken by the charities, but those commercial participators—the organisations such as supermarkets and other retailers that help charities to fund raise, but are not themselves professional fundraisers—that represent themselves as raising charitable funds for a benevolent or philanthropic purpose but, in practice, do not ultimately give much money to the charity in question. That is a legitimate concern. In recent years, I have been worried about the fact that, although section 60 of the 1992 Act was well drafted and well intentioned, it has been pretty widely ignored. When walking down an average high street, one sees many examples of things that purport to be charitable or imply that they are for a charitable purpose that simply ignore section 60 of the 1992 Act. I therefore broadly welcome clauses 66, 67 and 68.

It is right that we seek to tighten protection for efficient, legitimate fundraising. The onus is on the Parliamentary Secretary to take on his responsibilities as Minister for the third sector. He should consider the enforcement and the practical application of the provisions and ensure that the Charity Commission and others concerned with enforcement find a mechanism to make it easy for people to report breaches. I suspect that many breaches are inadvertent and quite innocent. The hon. Member for Isle of Wight mentioned businesses such as Tesco and John Lewis, which contribute a great deal to charity. Perhaps I should declare an interest as the director of fundraising who managed to secure the designation of Tesco charity of the year for the Alzheimer’s Society. I worked closely with Tesco and I think that its record on corporate responsibility and support for charity is very good. If it has inadvertently breached the law, I am sure that it was not with the intent of deceiving the public.

Nevertheless, the fact the breaches occur fairly routinely clearly opens the door for less scrupulous individuals to make a healthy profit out of apparently charitable sales and activities that do not benefit charities very much. So broadly speaking, I welcome the clauses.

Ed Miliband (Labour, Doncaster North)

This had been a good-tempered Committee until the hon. Member for Isle of Wight launched a scathing attack on the hon. Member for Cheltenham (Martin Horwood) through his comments on the professional middle classes, but I am sure that good humour will prevail eventually.

I shall talk briefly to amendments Nos. 128 and 131. The first seems like it was discussed a long time ago by the hon. Member for Isle of Wight. I hope to reassure him by pointing out that there is an offence suchas the amendment proposes under section 60(9) ofthe Charities Act 1992. The commission is not a prosecuting authority in that or any other respect, but his amendment would make it so by giving the commission the ability to initiate criminal proceedings. That would constitute a significant change in its role. As I said, the criminal offence exists and it is for the commission to draw offences to the attention of the police and for the Crown Prosecution Service to authorise a prosecution where appropriate.

Andrew Turner (Conservative, Isle of Wight)

Is it within the capacity of trading standards authorities to prosecute such cases?

Ed Miliband (Labour, Doncaster North)

It is. But let me say more generally—this relates to amendment No. 131 as well—that I take the points made by the hon. Members for Isle of Wight and for Cheltenham. There is concern about the failure to enforce the existing regime adequately. Clause 67(4) strengthens that regime and makes clearer the requirements on commercial participators to provide information on the destination of moneys derived from the sale of goods and services. However, I acknowledge that the commission needs to investigate breaches properly and to make it clear that it is happy to do so, and to draw attention to the ability of members of the public to take up issues with them. It will not be for the commission to decide to prosecute, but it has a big responsibility.

I hope that the hon. Member for Isle of Wight is reassured about the strengthening of the provisions. Let us hope that it will make a difference in practice. With that, I hope that he will withdraw his amendment.

Andrew Turner (Conservative, Isle of Wight)

The “wild allegations” were supported by information from the National Council for Voluntary Organisations and printed in its voluntary sector almanac for 2004. That information shows that every £10,000 raised by charities with an income of less than £100,000 costs £311 and every £10,000 raised by charities with an income in excess of £10 million costs £929.

Martin Horwood (Liberal Democrat, Cheltenham)

That is because smaller charities often do not employ paid staff. It is nothing to do with the efficiency of the fundraising, but to do with the fact that larger charities tend to employ staff and smaller ones do not.

Andrew Turner (Conservative, Isle of Wight)

I sense a vested interest, although not a current one. I welcome the fact that charities recruit volunteers to do their fundraising.

Section 60(3)(c)(i) of the 1992 Act says that the commercial participator shall accompany the offer for sale with a statement clearly indicating:

“what proportion of the consideration given for goods or services sold or supplied by him...is to be given to or applied for the benefit of the institution or institutions concerned”.

It is frightening to find that, however good it is generally, Tesco has not read that bit of the law. I am sure that it would not avoid reading the relevant bit of the food safety legislation, but perhaps I am wrong.

I accept the Parliamentary Secretary’s acknowledgement that it is not the Charity Commission’s responsibility to prosecute; in fact, it should draw things to the attention of the police or trading standards. I also welcome the suggestion that the Charity Commission must investigate potential breaches a lot more rigorously.

The Parliamentary Secretary did not answer well the points raised by the AFC, but he is attempting to strengthen the law, not to introduce unnecessary regulation, and we will have to judge it by its effect. I beg to ask leave to withdraw the amendment.

Clause 69

Roger Gale (Conservative, North Thanet)

We now come to amendmentNo. 157, with which it will be convenient to take amendments Nos. 158, 77 and 159. I call Mr. Turner.

Andrew Turner (Conservative, Isle of Wight)

I was concerned about whether the Secretary of State would exercise the powers in respect of large charities. However, we have discussed enough the expenditure of large charities and whether further regulation is needed, so I do not propose to move the amendment.

Clause 70

Andrew Turner (Conservative, Isle of Wight)

I beg to move amendment No. 47, in clause 70, page 75, line 16, after ‘conditions’, insert

‘, which shall be proportionate to the risk of loss or abuse of public money and the capacity of the institution to comply therewith,’.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following amendments: No. 48, in clause 70, page 75, line 16, at end insert—

‘(3A) Where financial assistance is given in return for the delivery of a service, the Secretary of State shall ensure that a reasonable opportunity is given to a range of institutions to offer to deliver to the service.’.

No. 49, in clause 71, page 76, line 25, after ‘conditions’, insert

‘, which shall be proportionate to the risk of loss or abuse of public money and the capacity of the institution to comply therewith,’.

No. 50, in clause 71, page 76, line 25, at end insert—

‘(3A) Where financial assistance is given in return for the delivery of a service, the assembly shall ensure that a reasonable opportunity is given to a range of institutions to offer to deliver to the service.’.

Andrew Turner (Conservative, Isle of Wight)

There are two purposes to these amendments. Amendments Nos. 47 and 48 would require a degree of proportionality in the Secretary of State’s activities. I am concerned about regulation being introduced through the back door. However, it is likely that I shall accept suitable assurances from the Parliamentary Secretary in that respect.

Amendments Nos. 49 and 50 deal with how Governments—not just the present one—sometimes feel the need to set up a charitable vehicle to undertake part of their activities even though there might already be a suitable vehicle to undertake the work. The example I have in mind is the Experience Corps, the purpose of which was to encourage more people to get involved in charities, particularly people close to or beyond retirement age. I had a conversation with the director of one organisation who questioned whether her organisation would not have been equally capable of doing exactly the same job, without the establishment of an organisation that began to look like a Government vehicle rather than a genuine charity and that cost a huge amount of money.

In a parliamentary answer to me on 12 September 2005, the hon. Member for Wythenshawe and Sale, East (Paul Goggins), then a Home Office Minister, told me that the Experience Corps

“received approximately £20 million from the Home Office”

and that its

“target was to recruit 250,000 new volunteers”.

However, as of December 2003, it had only

“recruited over 153,000 volunteers”.—[Official Report, 12 September 2005; Vol. 436, c. 2633W.]

Even my arithmetic is up to calculating that that works out at £130,000 per volunteer. Sometimes we ought to ask the Government whether they could not have acted more efficiently. That is the purpose of amendments Nos. 48 and 50.

Ed Miliband (Labour, Doncaster North)

I sympathise with the intentions behind the amendments, but I hope that I can satisfy the hon. Gentleman that they are unnecessary.

On amendments Nos. 47 and 49, the compact of good practice, which was agreed between the Government and the voluntary sector and with which the hon. Gentleman will be familiar, is important because it covers precisely the issues that he discussed, including proportionality in monitoring requirements. He was right to raise the matter, because the interaction between the Government and the voluntary sector is important and we must get our practice right in that area. I do not think that the hon. Gentleman’s amendments would add all that much to what already exists, but I am sympathetic to the intentions behind them.

I shall deal briefly with amendments Nos. 48 and 50. Again, I agree with the hon. Gentleman’s view, but the distinction that I would draw is that the Government are often not best placed to disburse funds. It should not necessarily be the job of the new Office of the Third Sector to spend lots of time filtering grant applications. For example, V, a new charity for young people, will distribute resources on an arm’s length and independent basis to organisations that encourage volunteering opportunities for young people. It is better to use the voluntary sector’s expertise to do that sort of thing than to do it within Government.

However, that does not detract from the hon. Gentleman’s point. When the Government consider setting up new vehicles and institutions, we must be careful not to duplicate existing bodies that could do the job better. The compact is designed to cover that, too. I take his point in both cases, but hope that on the basis of reassuring words and firm intentions on my part, he will withdraw his amendments.

Peter Bottomley (Conservative, Worthing West)

May I ask the Minister to help the Committee on a couple of points? Subsection (6) says that the Secretary of State

“may make arrangements for...assistance under subsection (1) to be given”—

that is, financial assistance—or he may delegate the matter. Could the hon. Gentleman give the Committee one or two illustrative examples of hypothetical or actual cases in which the Secretary of State might want that power?

Subsection (10)(b) mentions

“an institution (other than a charity) which is established for charitable, benevolent or philanthropic purposes.”

I am not too concerned about the benevolent or philanthropic purposes, but will the Minister give an illustrative example of something that is not a charity that is established for charitable purposes?

Roger Gale (Conservative, North Thanet)

I call the Minister.

Ed Miliband (Labour, Doncaster North)

I thought you might be about to call the hon. Member for Isle of Wight, Mr. Gale, but sadly not.

Roger Gale (Conservative, North Thanet)

Order. The Minister is not compelled to respond, but if I call the hon. Member for Isle of Wight, I shall wind up the debate.

Ed Miliband (Labour, Doncaster North)

No, I am happy to respond, Mr. Gale. I was not seeking to question the Chair and your wisdom.

I answered the first question put by the hon. Member for Worthing, West (Peter Bottomley) in my previous remarks. An example such as he asks for is an institution that is set up by the Government and disburses Government funds. Such bodies include V, which is encouraging youth volunteering, and Future Builders, which is providing loans and grants to institutions and charities that want to help deliver public services.

An example of an institution other than a charity that is established for charitable purposes is Amnesty International, which is not a charity but does have charitable purposes. I hope that that is helpful to him and the Committee.

Andrew Turner (Conservative, Isle of Wight)

I am grateful for the warm words of the Minister. I am even more grateful for his firm intentions. I beg to ask leave to withdraw the amendment.

Clause 72

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move amendment No. 156, in clause 72, page 77, line 20, at end insert—

‘(Z1) The Secretary of State must, one year after the year in which this Act is passed and each year subsequently, make a statement to the House of Commons, which must address the following matters—

(a) the number of registered charities in England and Wales, and an indication of whether this number has risen or fallen since the previous statement,

(b) the number of organisations which have failed to obtain or retain charitable status under sections 2 or 3 of this Act in that year, and why they have failed,

(c) the total value of Gift Aid and other special tax provisions for registered charities in that year,

(d) the total net cost of Value Added Tax to registered charities in that year, and

(e) the number and value of central government contracts placed with registered charities in that year.’.

The amendment is straightforward and I hope that it will command widespread support and sympathy in the Committee—

Ed Miliband (Labour, Doncaster North)

No.

Martin Horwood (Liberal Democrat, Cheltenham)

The Minister may not realise the opportunity that he is missing with this amendment.

The clause obliges the Minister to report on the operation of the Act not later than in five years’ time, but some of the conditions and changes to charity law that we have been discussing, may have immediate implications for charities and change the way in which charity registration happens. They might also change and even challenge the effectiveness of the Charity Commission. It is therefore important that we have an annual review of the sector’s operation.

The implications for the sector are wider than simply the provisions in the clauses that we have discussed in this Committee. The relationship between the Government and the private and voluntary sectors in terms of the delivery of services and public policy objectives is a legitimate subject for regular review. Review does take place, but on a piecemeal basis, together with occasional debates on volunteering in Westminster Hall and ministerial speeches on particular projects. It would therefore be valuable to have a well rounded and concentrated report each year. The members of the Committee are extremely well informed on the third sector, but we may be in a minority among our colleagues in terms of a real knowledge of the way in which the sector is operating.

As I have said in the amendment, reviewing the changes in the number of registered charities—whether that number is rising or falling—may reveal trends resulting from the changes to charity registration in the Bill. The number of organisations that have failed to attain or to retain charitable status is clearly relevant to the changed arrangements in relation to the new heads of charity and the public benefit test. There are differing views on the public benefit test—whether it represents a continuation of the status quo, as the Government believe, or operates tighter guidance, as I would wish, or offers a privileged position to private schools, as the hon. Member for Isle of Wight and his colleagues would prefer. Those matters should be discussed and any legitimate concerns about the operation of the public benefit test could then be revealed sooner rather than later.

We could discuss the total value of gift aid and other special tax provisions for charities in that year. That would provide an opportunity for the Parliamentary Secretary to parade the extraordinary generosity of Government towards charities in the form of the various tax breaks and concessions that it offers to them. However, in fairness, the report should also include the total net cost of value added tax to registered charities. The amount that it costs the many charities that are not able to recover VAT because they do not sell anything is a matter of concern in the sector. That is, in effect, a tax on charities, which those of us who are sympathetic to the third sector ought to be lobbying our respective Treasury teams to tackle through amended policies. The review that I propose would offer an opportunity for the issue to be discussed in Parliament in a cool-headed, rational and well informed way.

Finally, a report on the number and value of central Government contracts placed with registered charities in the relevant year would help to illustrate the developing relationship between charity, the private sector and the Government.

The amendment is balanced and reasonable, and would introduce a welcome opportunity for Parliament to discuss the values and development of the third sector in a well informed way.

Ed Miliband (Labour, Doncaster North)

If I were giving star ratings to the hon. Gentleman’s amendments, amendment No. 72 would be low down the list—indeed, I am not sure that it would receive more than one star. Let me explain why.

The matters set out in paragraphs (a) and (b) of proposed new subsection (Z1) are for the Charity Commission, which will have to provide an annual report to Parliament. Paragraphs (c), (d) and (e) have only tangential relevance to the Bill. However many important claims I would make for the Bill, I would not claim that it will have a huge impact on the operation of gift aid, the total net cost of value added tax or the number and value of central Government contracts, although that is not to say that some of the other things that are being done will not affect them. All Departments produce an annual report, which will certainly cover issues such as those that the hon. Gentleman has raised.

Martin Horwood (Liberal Democrat, Cheltenham)

If the Minister were to give an assurance that his Department’s annual report will cover all the subjects in the amendment, I would happily withdraw it.

Ed Miliband (Labour, Doncaster North)

I will not do that, but I shall give the hon. Gentleman the assurance that we will attempt to cover the issues that he raises, while of course respecting the fact that tax—as I am sure even the Liberal Democrats know—is a matter for Her Majesty’s Treasury. I would not want to trespass upon that territory, but I am sure that the more general issues affecting the charitable sector will be covered in the annual report.

Peter Bottomley (Conservative, Worthing West)

While the Minister is dealing gently and fairly with the hon. Member for Cheltenham, could he tell the Committee what kind of person he might have in mind to commence the review? Also, given that the clause says that the review should start within five years of the passing of the legislation, roughly how long does the Minister think the review might take?

Ed Miliband (Labour, Doncaster North)

I believe that the review is to be conducted by central Government. That is the commitment made in the Bill. If the hon. Gentleman is proposing himself a potential reviewer, I am sure that he will be considered by the relevant Minister at the time. No doubt the hon. Gentleman has important qualifications in that respect.

Peter Bottomleyrose—

Ed Miliband (Labour, Doncaster North)

I was going to say that I hoped that the hon. Gentleman would be satisfied with that, but I should have known better.

Peter Bottomley (Conservative, Worthing West)

If it was intended that central Government conduct the review, the Bill would make that plain, but subsection (1) states:

“The Secretary of State must, before the end of the period of five years beginning with the day on which this Act is passed, appoint a person to review generally the operation of this Act.”

I am not saying that Minister ought to know five years in advance the name of the person who might be appointed, but perhaps on Report he can give an illustrative example of how that appointment might take place and say whether the report should be completed within one or two years.

Ed Miliband (Labour, Doncaster North)

I give that undertaking.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful to the Minister for his comments, from which I take some comfort. If he is going to attempt to address the relative benefits of the various tax breaks and the tax cost of irrecoverable VAT in his annual report, as I think he undertook to do—

Edward Milibandindicated dissent.

Martin Horwood (Liberal Democrat, Cheltenham)

Well, he said that he would attempt to cover those issues. I am sure that his hon. Friends in the Treasury would look kindly on his addressing at least the impact of the tax implications of VAT on sector, but if that is not possible, perhaps he could encourage the Chancellor to do so another time. Under those circumstances, I beg to ask leave to withdraw the amendment.

Clause 73

Ed Miliband (Labour, Doncaster North)

I beg to move amendmentNo. 191, in clause 73, page 78, line 16, at end insert—

‘(ba) any regulations under section (Disclosure of information to and by Northern Ireland regulator),’.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following: Government amendments Nos. 192, 194 to 199 and 193.

Government new clause 14—Disclosure of information to and by Northern Ireland regulator.

Ed Miliband (Labour, Doncaster North)

The amendments are relatively technical. I apologise to the Committee for their late tabling on Tuesday. We have tried to avoid tabling bundles of amendments at the last minute, but it took longer to prepare these amendments than I had hoped. I shall briefly explain what they will do.

The revised version of section 10 of the Charities Act 1993 provides for the disclosure of information to and by the Charity Commission. It includes specific provisions relating to the exchange of information by the commissioners for Revenue and Customs.

The purpose of the Government amendments is fourfold. First, they will modernise the information-sharing gateway between the commissioners for Revenue and Customs and the Charity Commission to reflect changes to the way in which HMRC wishes to disclose information following the passing of the Commissioners for Revenue and Customs Act 2005. Secondly, the amendments will extend the gateway for the sharing of information, including Revenue and Customs information, to principal regulators of exempt charities. Thirdly, they make provision for sharing of information including commissioners of Revenue and Customs’ information with the proposed regulator of charities in Northern Ireland. Finally, they make some minor changes to the rules governing disclosure of other information to and by the Charity Commission. I hope that that brief explanation satisfies the Committee.

Peter Bottomley (Conservative, Worthing West)

I am sure that what the Minister has outlined makes sense. I congratulate peopleon spotting one or two of the moves from “commissioners” to “commission”, which are a consequence of earlier parts of the Bill.

Is Government new clause 14 precedented? The Minister will know that it relates to the provision whereby, if a charity commission in Northern Ireland is established, various other things happen. I can see the reason for the new clause, and it makes sense, but is it a legislative innovation?

Ed Miliband (Labour, Doncaster North)

I gather that it is not a legislative innovation.

Clause 74

Peter Bottomley (Conservative, Worthing West)

I think that the clause is drafted to provide a sensible and limited power. The guts of it are subsections (4) and (5). Subsection (4) states:

“The Secretary of State may by order make—

(a) such supplementary, incidental or consequential provision, or

(b) such transitory, transitional or saving provision

as he considers appropriate for the general purposes, or any particular purpose of this Act or in consequence of, or for giving full effect to, any provision made by this Act.”

Subsection (5) states:

“An order made under subsection (4) may amend, repeal, revoke or otherwise modify any enactment.”

The first three subsections of the clause are relevant to schedules 8, 9 and 10, but subsections (4) and (5) are not tied to them. I am not suggesting that the Minister has created the opportunity to drove a coach and horses through any part of charity law provision, but I would like the Committee to have his reassurance on what the limitations are.

Ed Miliband (Labour, Doncaster North)

My understanding is that there are constraints in the legislation, but to be fair to the hon. Gentleman, I should write to him and set them out on paper.

Schedule 8

None

Ed Miliband (Labour, Doncaster North)

I beg to move amendmentNo. 181, in schedule 8, page 138, line 24, at end insert—

‘Sex Discrimination Act 1975 (c. 65)

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss Government amendments Nos. 182, 59 to 61, 63 and 64 and 184 to 187.

Ed Miliband (Labour, Doncaster North)

The group consists entirely of minor or technical amendments.

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move amendmentNo. 104, in schedule 8, page 149, line 14, after ‘manager’, insert

‘(who will otherwise be known as an interim trustee as appropriate)’.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following: Amendment No. 106, in schedule 8, page 149, line 14, after ‘manager’, insert ‘or interim trustee as appropriate’.

Amendment No. 107, in schedule 8, page 150, line 6, after ‘manager’, insert ‘or interim trustee as appropriate’.

Amendment No. 108, in schedule 8, page 150, line 11, after second ‘manager’, insert ‘or interim trustee as appropriate’.

Amendment No. 109, in schedule 8, page 150, line 13, after ‘manager’, insert ‘or interim trustee as appropriate’.

Amendment No. 110, in schedule 8, page 150, line 15, after second ‘manager’, insert ‘or interim trustee as appropriate’.

Amendment No. 111, in schedule 8, page 150, line 19, after second ‘manager’, insert ‘or interim trustee as appropriate’.

New clause 3—Reasons for appointing an interim manager of a charity—

‘In section 19 of the 1993 Act, after subsection (1), insert—

“(1A) Within seven days of an appointment under subsection (1), the Commission must communicate in writing to—

(a) the persons who are or claim to be the charity trustees of the institution concerned; and

(b) (if a body corporate) the institution which is the subject of such an appointment;

the reasons why they consider such an appointment necessary and appropriate.”’.

New clause 4—Remuneration of an interim manager of a charity—

‘In section 19 of the 1993 Act—

(a) in subsection (5) leave out “the charity concerned” and insert “the commission”;

(b) in subsection (6) leave out “out of the income from the charities concerned” and insert “by the commission”.’.

New clause 5—Amendment of section 19 of the 1993 Act—

‘Section 19 of the 1993 Act in subsection (3) is amended by inserting after “as they think fit”, the words “, who may, where appropriate to the size of the charity and expertise required by the charity, act in a voluntary capacity.”’.

New clause 9—Appointment and payment of the Receiver and Manager—

‘(1) In section 19(1) of the Charities Act 1993, at end insert “subject to a public tender exercise conducted in line with best practice from the Office of Government Commerce.”

(2) In section 19(6)(b) of the Charities Act 1993 (c. 10), after “the income of the charities concerned”, insert “subject to a public tender exercise and up to a sum agreed in such an exercise, any additional costs to be met by the Commission.”’.

Martin Horwood (Liberal Democrat, Cheltenham)

Amendment No. 104 is extremely important. It deals with an issue about which much concern has been expressed by certain charities: the title of receiver and manager that is used when the Charity Commission steps in and changes a charity’s administration.

Receivers and managers have a very wide remit, and the proposed title of interim manager is a misleading one. Only a small proportion of receivers and managers who have been appointed have had the kind of narrow remit to which the term “interim manager” might be appropriate. Using the Freedom of Information Act 2000, the Association for Charities has obtained details of 51 receiver and manager appointments between 1993 and the end of June 2005. The vast majority of those appointments excluded trustees: in effect, the existing trustees were taken out of the charity’s administration and the temporary receiver and manager was inserted. To all intents and purposes that is an interim trustee appointment.

The importance of the phraseology is twofold. First, it makes the real status of such persons clear, and removes the confusion that has undoubtedly existed in the past, sometimes among trustees and former trustees of the charity and sometimes even among the receivers and managers, if the evidence from the Association for Charities be believed. The association has even cited evidence of confusion among commission staff. Secondly, and perhaps more important, is the message that is sent to people who support the charity. In any circumstances, beneficiaries’ interests are best served by an organisation that is properly administered, either by the original trustees or by an interim receiver and manager, and that can carry on its legitimate charitable activities with the maximum possible funding. That depends absolutely on public confidence and often depends also on continuing public donations. If the public are told that a receiver, or even an interim manager, has been appointed, a confusing signal is sent that might cast doubt over whether the charity is in crisis, and that doubt might deter them from donating. The term “interim trustee” is much less value-laden and much less threatening.

Peter Bottomley (Conservative, Worthing West)

Many members of the Committee have had the chance to read the schedule produced by the Association for Charities, but will the hon. Gentleman tell us for how long, on average, such people remain in post? Will he confirm whether any of them were appointed because there was not a crisis?

Martin Horwood (Liberal Democrat, Cheltenham)

I cannot answer the hon. Gentleman’s first question. I am sure that most receivers and managers were appointed because of real concerns, and even the Association for Charities document cites cases that I would describe as being arguable either way. In some cases, there are legitimate arguments for the commission having to intervene. However, that does not mean that it is right unnecessarily to damage public confidence in a charity, especially since, if the commission is really worried about how it is being administered, the very act of appointing a receiver and manager is done with the intention of bringing the charity back into line. The idea is that it will then be properly administered and that the receiver and manger will continue to administer it in the best way possible.

James Duddridge (Conservative, Rochford and Southend East)

The hon. Gentleman is eloquently making the case for the title of “interim trustee”. However, I am worried that the use of “trustee” might confer additional legal responsibilities for the organisation that people would not be willing to accept, especially financial responsibilities. While it sets the right tone, is there not a tight legal definition of a trustee? It would cause confusion.

Martin Horwood (Liberal Democrat, Cheltenham)

That is a valid point, but if the existing trustees have been displaced and excluded, which is what has happened in the majority of cases, the person appointed to be the receiver and manager, interim manager, or interim trustee—whatever we call him—might be taking on the legal responsibilities of trusteeship and certainly the responsibility to comply with charity law that applies to the trustees who have been excluded. I cannot see who else would take on that responsibility in such circumstances.

Andrew Turner (Conservative, Isle of Wight)

The hon. Gentleman seems to be asserting, as I believe the Association for Charities does, that we cannot have a charity without trustees and that the most senior person who appears to be administering the charity becomes the trustee, whether they want to or not, for the charity’s purposes and its resources. Therefore, an interim whatever is a trustee in law even if he did not intend to be.

Martin Horwood (Liberal Democrat, Cheltenham)

The hon. Gentleman may well be right, although I am not necessarily asserting that the individual becomes a trustee. My legal qualifications are not such that I could say whether the person would become a trustee in law, but in that appointment he would certainly seem to carry the responsibilities of a trustee and, thus, be acting as if he were a trustee. That is why the amendment is sensible. It would protect the interests of beneficiaries by maintaining public confidence in the charity and stop the confusion and dispute over the role of receivers and managers that has been present in the past.

Andrew Turner (Conservative, Isle of Wight)

I am pleased to support the amendment. The role of the proposed interim manager, who has hitherto been called the receiver and manager, needs to be bottomed out and made more clear in respect of when the trustees are removed or when that individual has power to override them. That is clearly the purpose of such an appointment. To be neutral for a moment, if a chief executive is appointed to a charity and that person either has the practical power to override the trustees or the commission removes the trustees and leaves a gap before appointing new trustees, someone must have legal responsibility for the trust. Whether or not my assertion is correct that that person takes on that responsibility under law, he does so in practice. That cannot be gainsaid. It seems absolutely correct that we should make it clear that that person is an interim trustee or perhaps even the interim trustee.

I am worried about the practice of the appointment of interim mangers and trustees. Before I speak to the new clauses, I should say that amendments Nos. 106 to 111 are merely consequential on amendment No. 104. I am anxious about three aspects of the appointment of trustees or interim managers, each of which is neatly covered by my new clauses.

First, the charity trustees or corporation—if the charity is incorporated—must be notified in good time of the reasons for the appointment, otherwise it will be impossible for them to appeal against it. Apart from anything else, that is good practice, common sense and a courtesy. Furthermore, they will be unable take advantage of the tribunal if they do not know the reasons for the appointment. I suspect that unless that requirement to notify is placed in the Bill, or the commission makes an undertaking that it will always do so, there will be lots of appeals to the tribunal.

Ed Miliband (Labour, Doncaster North)

I am the bearer of good news. That has been placed in Bill following a debate in another place. Paragraph 108 of schedule 8 inserts a new section into the Charities Act 1993 to achieve precisely that purpose.

Andrew Turner (Conservative, Isle of Wight)

The sun has indeed got his hat on—hip, hip hooray.

New clause 4 deals with my second concern—the remuneration of trustees. My hon. Friend the Member for Worthing, West referred to appendix 2, which I think was circulated to all members of the Committee. It is headed “appendix 2”, but I am not clear on what it is an appendix to. However, it is the outcome of a list of appointments of receivers and managers over the period from 1993 to 2004. It runs to seven or eight pages and covers the appointment of 51 receivers and managers.

The problem is that such people have to be paid. A bigger problem is that they can be paid, and usually are, by the charity on the orders of the commission under the 1992 Act. When I list the first page of the companies that furnish those trustees, hon. Members will be able to imagine the sort of the sums that we are talking about. The list reads as follows: Coopers and Lybrand, Coopers and Lybrand, Arthur Andersen, Arthur Andersen, Coopers and Lybrand, KPMG—then there is one that I have never heard of—BDO Stoy Hayward and Coopers and Lybrand. That is just the first page. Those are big companies that cost a huge amount to retain, as the Government know because they do it all the time. When such companies are appointed to run small charities—or indeed large ones—they inevitably rack up huge bills.

Sadly, the freedom of information search found only about seven or eight examples in which the commission retained sufficient information to tell the researcher how much it had spent on the 51 receivers and managers. In one case the figure was £129,000 for six months, in another £87,000 for nine months, in another £393,000 for four months’ work—these are KPMG rates—and in a further case the figure was £72,000 for five months’ work. All those sums were paid for by the charity.

I accept that we cannot measure the work of a big company such as KPMG solely by the time that elapses between its appointment and its discharge. I am sure that in many cases such companies do not do much for part of the time and that they do not charge for those periods. However, those are huge sums to charge small charities. I am concerned to read that in at least one case—the Little Gidding Trust case—the commission refused to appoint a receiver and manager whenthe trustees requested that it do so, because the commission believed that the charity did not have liquid funds with which to pay the receiver and manager. That is not the Charity Commission working in the best interests of the charity. I propose therefore in new clause 4—this is fundamental—that the commission and not the charity should meet the regulatory cost.

New clause 5 emphasises that. I cannot see a single person in the list of 51 who is a volunteer. I shall let other Committee members into a secret, Mr. Gale, of which you might be aware: for many years, whenever there was a row in a Conservative association, the professional staff in the Conservative central office had to spend hours trying to sort it out. [Interruption.] Of course there were lots of rows, as I am sure there are in other parties as well. Recently, that has been changed. Professional staff in central office now spend their time campaigning or assisting people in campaigning—in some cases, not as effectively as we might like, but never mind; that also is true for all parties—while the senior volunteers spend their time trying to sort out the rows. I see no reason why the commission should be wedded to appointing hugely expensive international firms of consultants, for that is what they are.

Helen Goodman (Bishop Auckland) (Lab) indicated assent.

Andrew Turner (Conservative, Isle of Wight)

The hon. Lady nods. I hope that she will not mind my drawing attention to it. Such consultants are hired to sort out problems that could well be solved using the common sense of an experienced volunteer.

Roger Gale (Conservative, North Thanet)

I call the Minister.

Martin Horwood (Liberal Democrat, Cheltenham)

On a point of order, Mr. Gale. I was advised earlier that we could speak more than once during debate on a clause.

Roger Gale (Conservative, North Thanet)

Order. The hon. Gentleman is absolutely right. It is customary, after the two Opposition Front-Bench spokesmen have spoken to their amendments, to hear from the Minister. If the hon. Gentleman wishes to contribute further before the Minister responds, he may do so.

Martin Horwood (Liberal Democrat, Cheltenham)

I am extremely grateful for your indulgence, Mr. Gale. I apologise that I neglected to address new clause 9, which stands in my name and has been grouped with amendment No. 104.

New clause 9 is relevant to the remarks made by the hon. Member for Isle of Wight on new clause 4, because the two offer alternative approaches to the possibility that the cost of receivers and managers, interim managers, trustees or whatever they will end up being called will run out of control. I have a lot of sympathy with new clause 4, and the sums that the hon. Gentleman recited sound extremely high, but it is unreasonable simply to say that the Charity Commission should always bear the cost of sorting out the problems of a charity that has, legitimately or not, been put into such a situation.

The most alarming thing about the Association for Charities report, although I cannot find the page that gives chapter and verse, is that in some cases the original estimated cost of the receiver and manager, and therefore the basis on which the contract was awarded, was exceeded by a huge proportion—six or seven times, if I am right. In such circumstances, there is a legitimate reason for the commission to bear at least the cost of any surplus over what was originally intended.

New clause 9 would address the problem by saying that a proper public tender exercise must be conducted in line with best practice from the Office of Government Commerce, which I am sure is very good indeed. If a cost has been estimated to the receiver and manager, there would therefore be some onus on them to limit costs and a direct interest for the commission in restricting excessive costs among the receivers and managers that it appoints, because it will run the risk of bearing the costs if they are excessive.

Regrettably, I cannot support new clause 4, but I invite the hon. Member for Isle of Wight to support new clause 9. If the opportunity arises, I shall press it to a Division.

Roger Gale (Conservative, North Thanet)

The hon. Gentleman has indicated that he would like to force a Division on new clause 9 when the appropriate moment arrives, and the hon. Member for Isle of Wight indicated that he wished to press one of his amendments. If he does, he had better tell me now, or it will not be moved.

Andrew Turner (Conservative, Isle of Wight)

That was merely a way of finishing a speech, Mr. Gale. I apologise for misleading you.

Ed Miliband (Labour, Doncaster North)

The amendments are important, but I disagree with them. None the less, I hope to offer some words of reassurance.

Amendment Nos. 104 and 106 to 111 are all about the name “interim manager”. It is precisely because of the debate in another place that we have changed the name from “receiver and manager” to “interim manager”, because it was considered in that the name “receiver” would conjure up inappropriate images. Interim managers are appointed only after an inquiry has found misconduct or has found that property is at risk—appointment is not a trivial matter. Last year, there were only two cases of appointment of an interim manager among all the charities in Britain. Appointment of an interim manager is both a serious and an unusual occurrence.

I do not think that the name “interim trustee” would be appropriate. It is true that interim managers sometimes assume the whole of the trustee’s responsibilities, but on occasion they assume only part of those responsibilities. It would be incredibly confusing for there to be both an interim trustee—whom we propose to call the interim manager—and a group of trustees who would continue to fulfil some of their charitable functions. An interim manager might, for example, assume responsibility for the charity property, with operations remaining in the jurisdiction of the trustees. The solution proposed by the amendment was potentially ingenious, but it would lead to confusion.

Alun Michael (Labour, Cardiff South and Penarth)

I understand the point that my hon. Friend makes, and it is a powerful one. The point of the amendment would be to clarify the function being undertaken. However, although it cannot be dealt with now, is there a case for a title such as “interim trustee” to be used when all the trustees’ functions are being taken over, rather than only part? That should not be decided on the hoof, but will my hon. Friend reflect on it?

Ed Miliband (Labour, Doncaster North)

I shall, but my first impression is that my right hon. Friend’s suggestion might lead to even further confusion. An interim trustee would be appointed if he were going to run the whole charity, whereas an interim manager would be appointed if only part of the charity were going to be run under his jurisdiction. I am not sure that that would convey the message that we want to convey, though I appreciate that the suggestion is an ingenious one.

Martin Horwood (Liberal Democrat, Cheltenham)

Would the Minister be moved in his position by the opinion of counsel that was obtained by the Association for Charities? That concluded:

“For practical purposes, therefore, an R and M has the same powers as the trustees whom he displaces, whether the displacement is in whole or in part, albeit that he exercises them under the Commission’s supervision.”

Does the Minister therefore accept that the confusion already exists, or at least that legal differences of opinion already exist? The suggestion made by the right hon. Member for Cardiff, South and Penarth (Alun Michael) has a lot to recommend it.

Ed Miliband (Labour, Doncaster North)

I do not agree. The legal opinion might be right, but that does not detract from the fact that trustees continue to fulfil part of the functions in the case of at least some interim manager appointments. To give the interim manager the name “interim trustee” would suggest that the trustees no longer had any powers over the organisation.

Martin Horwood (Liberal Democrat, Cheltenham)

The evidence obtained by the Association for Charities under the freedom of information legislation suggests that that is exactly what is happening in the majority of cases—the existing trustees are excluded.

Ed Miliband (Labour, Doncaster North)

The question is not about the majority of cases—we are trying to deal with all cases. The question is whether the term “interim trustee” would be appropriate in all cases, and the problem is that it would not be appropriate. Where would that leave the original trustees who are continuing to carry out functions? It is all very well the hon. Gentleman saying that my right hon. Friend’s suggestion is correct—it is ingenuous—but I am not sure what it would achieve.

In the most serious cases, we would have an interim trustee appointed where all the powers were being taken over. In the cases seen as less serious, we would have an interim manager appointed with trustees continuing to exercise some functions. If the hon. Gentleman’s concern is that the notion of “interim manager” is an unfortunate term—because it suggests a gravity that he thinks is inappropriate—it does not meet his purpose to apply it to what might be seen as the less serious cases.

Several Hon. Membersrose—

Ed Miliband (Labour, Doncaster North)

I have a wealth of options before me, but let me carry on with the hon. Gentleman.

Martin Horwood (Liberal Democrat, Cheltenham)

The suggestion of the right hon. Member for Cardiff, South and Penarth is more ingenuous than he realises. In the less grave situations, charity trustees would still be in position. Therefore, the damaging impression would not necessarily be there. It is only in the case in which the charities are completely excluded that the greatest risk to public reputation is present.

Ed Miliband (Labour, Doncaster North)

I am not sure that I follow that point but let me give way to the hon. Member for Isle of Wight.

Andrew Turner (Conservative, Isle of Wight)

I think that the Minister is construing this amendment slightly too sharply because it actually refers to

“’(who will otherwise be known as an interim trustee as appropriate)’.”

In other words, if someone has responsibilities of trusteeship, he is known as an interim trustee. If he does not, he is not known as that. That was the intention of amendments Nos. 106 to 111.

Ed Miliband (Labour, Doncaster North)

I fear that we are beginning to dance on the head of a pin. I understand the point being made. My point is that that is an unusual case; it happened twice last year. Let us have one name covering the appointment of those individuals. To have different names for the same individual, albeit exercising powers that are slightly different in whole or in part, will add to the confusion that hon. Gentlemen say that they want to clear up.

Alun Michael (Labour, Cardiff South and Penarth)

My hon. Friend is engaging precisely with the matters before us. I understand his wish not to make a change that might end up being more, and not less, confusing. He is right to attempt to achieve that. However, if there is a lack of clarity about what the responsibilities are in all cases and if there are two functions, one taking over the full trusteeship—[Interruption.]

Roger Gale (Conservative, North Thanet)

Order. If hon. Members wish to discuss matters with staff, they must do outside the Committee room.

Alun Michael (Labour, Cardiff South and Penarth)

If an individual comes in under those powers and takes over all the responsibilities of trustees, that ought to be clear in common-sense language to people outside. If that individual is taking over only a specific area, such as protection of property, that also ought to be clear because the trustees are still in place. I suggest to my hon. Friend the Parliamentary Secretary that he may be right—that defending what is in the Bill is the right course to take. However, it would be sensible to reflect on the available options and try to achieve terminology that is clear to the general public.

Ed Miliband (Labour, Doncaster North)

One thing that will add to the confusion is that the trustees always remain in office even if their functions are given to the interim manager. However, I will reflect on what my right hon. Friend says.

I do not think that there is an issue that needs to be cleared up because the substantive issues about interim managers are not really about the name, but about the costs, as raised by the hon. Member for Isle of Wight. They are about the ability to review both their appointment and continuing appointment, as raised earlier—very passionately—by the hon. Member for Cheltenham. I want to deal with that briefly, and I hope that that will provide some reassurance.

Earlier in our deliberations, the hon. Member for Cheltenham engaged in a protracted discussion with me about the extent to which the appointment of the interim manager and that person’s continuing presence in office was reviewable. I undertook to come back to him with the Charity Commission’s guidelines on how often it reviews the continued appointment of the interim manager and how often that decision can be reviewed. I can tell the hon. Gentleman that new, internal guidelines are being prepared and they will be implemented by the commission in the coming months. That will ensure that there is a gap of not more than two months in the process of reviewing the appointment of interim managers and, on each occasion, those decisions will be appealable to the charity tribunal. I know that he was worried about ensuring that there was proper scrutiny of the continuing presence in office of an interim manager and I hope that he will be reassured by what I have said.

I hope that I have answered the point about new clause 3 in my intervention on the hon. Member for Isle of Wight. Indeed, he concluded that the sun was shining as a result of it. New clause 4 is about who pays for the interim manager. I am sympathetic to the hon. Gentleman’s argument about the costs and nature of interim managers, and the impact that that could have. I reiterate that it is an unusual occurrence, but that is not to say that the costs that he described are large. Big sums are often at risk and liabilities are potentially incurred by an individual, as part of a corporate body, going in to sort out an organisation. Such people would need proper insurance to cover them, which partly explains why large, professional bodies tend to be involved.

Rob Flello (Labour, Stoke-on-Trent South)

Will my hon. Friend note the wider issue in respect of receiver’s fees? They have been extremely high in simple cases that are not associated with charities.

Ed Miliband (Labour, Doncaster North)

That is an important point that should be noted by the Committee.

In partial reassurance to the hon. Member for Isle of Wight, the hon. Member for Cheltenham explained why it is right in most cases for the charity concerned to bear the cost of the appointment of an interim manager. The commission can, however, in exceptional cases—it has done so recently—agree to pay the costs itself. As for new clause 5, it is already the case that receivers and managers may work for nothing. It is just that none of them chooses to do so. I hope that I have reassured the hon. Gentleman about that.

There are two aspects to new clause 9 tabled by the hon. Member for Cheltenham, the first of which is a sum being agreed in advance and who should meet the additional costs. There is a real danger in a public tender exercise. At present, the commission appoints from a panel, but a widely publicised public tender exercise would do more reputational damage to a charity than the current system of appointing from a panel.

Andrew Turner (Conservative, Isle of Wight)

I am sure that the Parliamentary Secretary is aware that the panel is sometimes appointed by public tender. That does not involve naming each individual charity that it might be called on to serve in the future. Is that the practice?

Ed Miliband (Labour, Doncaster North)

That may be right. I will happily look at the matter but I am not convinced that there is not a perfectly good system in place at the moment. I undertake to talk to the commission about how it chooses its panel and whether, tying together the comments of the two hon. Gentlemen, there is a sufficiently wide range of candidates that can come forward.

On the second part of the amendment, for the same reasons that the hon. Member for Cheltenham answered the hon. Member for the Isle of Wight about the costs being borne by the charity concerned, it would be difficult to say in advance before one has gone into the organisation to work out the full extent of its problems and difficulties that a certain sum must be the limit of how much the interim manager is paid. I take the points about cost control that have been made across all sides, and I will go back to the commission from the debate and I am sure that it will be listening and reading the transcript of our proceedings and hearing the Committee’s concern, but it is not practical to decide in advance how much those costs would be and essentially make the commission bear any additional cost. With that explanation I hope that I have satisfied the Committee.

Martin Horwood (Liberal Democrat, Cheltenham)

I am reassured by some of the Minister’s statements and certainly by his intention to go back and talk to the commission. He mentioned both the role of receivers and managers and possibly considering the suggestion by the right hon. Member for Cardiff, South and Penarth; to look at the excessive costs being run up on occasion by people in the position of receiver and manager and in future of interim manager or trustee, as we decide.

I think that he is being slightly optimistic, however. First, he said that this happens only once or twice a year. If that is true in the past 12 months, that is atypical, because as I mentioned earlier, the Association for Charities obtained the total list of appointments between 1993 and 2004 and in some years five or six such appointments were made. It is sometimes much more common than he suggests in his remarks.

It is a matter of legitimate concern among charities, particularly among smaller charities that are growing and developing and are possibly subject to scrutiny because some of the practices that they may have indulged in may not conform always to best practice. It might be a legitimate concern for the Charity Commission that in practice the appointment of the receiver and manager can end up doing more harm than good, and on occasion lead to the closing down of the independent charity.

While I take the Minister at his word on his good intentions to talk to the commission, I am still minded to press new clause 9 in particular to a vote to ensure that there is a clear incentive for both the appointed receivers and managers and for the commission to minimise those excessive costs.

Peter Bottomley (Conservative, Worthing West)

I think that the hon. Gentleman has picked the right new clause to press if he is going to press one, but we all recognise that the Charity Commission is not part of the debate while it might agree with one or two of the things that the association has said; for example, in one case the receiver manager found poor financial controls and record keeping, inability of trustees to work together, inadequate charitable activity, the absence of a definitive membership list, which had apparently been remedied, and the unconstitutionality of some trustee appointments. I think that people who were complaining about the Charity Commission accept the criticism that the charities were broadly just. He has picked the right new clause.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful for that generous intervention by the hon. Member for Worthing, West. He makes a legitimate point that we are not here to challenge the concept of appointing something equivalent to a receiver and manager or an interim manager in principle. Obviously in many cases that will be necessary and as I said in many of the cases presented by the Association for Charities the case is certainly arguable and I can see the argument on both sides.

However, as he suggested I am going to press new clause 9 to a vote. I beg to ask leave to withdraw amendment No. 104.

Andrew Turner (Conservative, Isle of Wight)

I beg to move amendment No. 51, in schedule 8, page 155, line 6, after ‘charity’, insert

‘but so that the requirements of such regulations shall be the minimum commensurate with the need to ensure that the statement of accounts provides a true and fair view of the charity’s financial position’.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following amendments: No. 52, in schedule 8, page 155, line 7, after ‘made,’, insert ‘or—

(c) for more than one type of statement to be prepared to reflect the differing natures and sizes of different charities,’.

Government amendment No. 62

Andrew Turner (Conservative, Isle of Wight)

These are simple amendments. Amendment No. 52 would require that those setting regulations for charities’ accounts be able to prescribe more than one statement

“to reflect the differing natures and sizes of different charities.”

Amendment No. 51 would provide that

“the requirements...be the minimum commensurate with the need to ensure that the statement of accounts provides a true and fair view of the charity’s financial position”.

Again, that is designed to put SORP into context, which at present it appears not to be, and to reflect more clearly the capacity of different charities to do things differently.

Some charities—I wish this were in the UK—of the character of the Bill Gates Foundation, but not of its size, need do no fundraising at all. All they do is disburse moneys. There is no need for them therefore to have the same accounting requirements as, say, a large charity that depends a great deal on fundraising.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful for the hon. Gentleman’s comments on the matter, but I am slightly confused. It seems to me that the advantage of SORP is its universality. Even if the declared fundraising costs are nil, there is a huge virtue in everyone following the same standard. However, in the interests of work-life balance and the time of day, I shall restrict my comments to that.

Peter Bottomley (Conservative, Worthing West)

A friend of mine essentially leads the trusteeship of a significant charity, and was amazed when approached by someone from the Charity Commission and asked, “Why aren’t you trying to raise more money?” She replied with the point that my hon. Friend made, “Actually, the job of our trusteeship is to spend the money that it has got, and is perfectly adequate for the purposes for which it was established. We do not want to be told to raise money, if we decide that we do not need to”. A degree of sensitivity would be worthwhile. I am sure that the Charity Commission is capable of distinguishing between charities that raise money and those that do not. It should not be telling people which of the two they should be doing.

Ed Miliband (Labour, Doncaster North)

First, let me deal with my amendment in this group. Essentially, it is a minor amendment consequent on the conversion from “Commissioners” to “Commission”.

I am afraid that the hon. Member for Isle ofWight gets no stars for his two amendments, uncharacteristically. Amendment No. 52 is unnecessary because section 86 of the 1993 Act, which applies to all regulation under this Bill, allows already for the Secretary of State to make provision for different cases. Indeed, current regulations do exactly that.

I understand the hon. Gentleman’s intention behind amendment No. 51, but I do not think that it is fit for purpose—to use the current parlance—because it would be placed in a paragraph dealing specifically with requirements on settlor trusts. I am sure that it is not his intention, but the amendment would essentially introduce a new “true and fair” yardstick for settlor trusts and their statements of accounts. That would introduce SORP into a part of the law applicable only to settlor trusts, and a whole new raft of accounting standards for settlor trusts, which I am sure is not the deregulatory intent for which he wishes to be famous.

The other thing about it is that paradoxically, it would introduce new requirements relating to settler trusts but would also, by using the phrase “minimum commensurate”, relax the obligations. It would not require settler trusts to comply with more general regulations relevant to all charities—for example, by disclosing the salaries of a charity’s highest paid employees.

I am afraid that this is comprehensively a no-stars amendment. I hope that the hon. Gentleman will withdraw it.

Andrew Turner (Conservative, Isle of Wight)

That is the sort of mark that I would have given it as well. I beg to ask leave to withdraw the amendment.

‘Constitutional Reform Act 2005 (c. 4)

‘Charities and Trustee Investment (Scotland) Act 2005 (asp 10)

‘Equality Act 2006 (c. 3)

Schedule 9

Peter Bottomley (Conservative, Worthing West)

I shall not go through what was in schedule 9 before it was amended, but the Minister will notice that there are references to the Charities Acts 1992 and 1993, among others. Does he have any information to give the Committee about when the Charities Act will be consolidated? When he read from the Charities Act, he was reading from a text that had a commentary to go with it because of the number of amendments.

It would be helpful to know whether the Government plan to make the Charities Act accessible to others. Various other provisions, such as the Regulatory Reform (National Health Service Charitable and Non-Charitable Trust Accounts and Audit) Order 2005, are involved as well, but the key point is the Charities Act itself. After the Bill becomes an Act, one of the first things that the Government ought to do is to consolidate it so that it is accessible to those who are not necessarily lawyers with textbooks.

Ed Miliband (Labour, Doncaster North)

I agree. It is an urgent task for us. After the Bill completes its passage, we hope to proceed as soon as possible.

Schedule 10

‘Section (Disclosure of information to and by Northern Ireland regulator): Disclosure of information to and by Northern Ireland regulator

Clause 77

Clause 78

Ed Miliband (Labour, Doncaster North)

I beg to move amendmentNo. 179, in clause 78, page 80, line 39, leave out subsection (8).

The amendment will remove the privilege amendment made in another place, taking account of the fact that the other place cannot legislate on public expenditure.

New Clause 1

Andrew Turner (Conservative, Isle of Wight)

I beg to move, That the clause be read a Second time.

This is an attempt to set out the responsibilities and duties of trustees in a single clause. I am sure that the Minister will tell us that they appear elsewhere in the legislation, or they might appear spread out over lots of different parts of the legislation. It may be that in the consolidation to which my hon. Friend the Member for Worthing, West referred a moment ago, those duties and responsibilities will be clarified and brought together. The new clause is probing rather than one that I expect to press to a vote.

Ed Miliband (Labour, Doncaster North)

I sympathise with the sentiments behind the clause. The Trustee Act 2000 covers unincorporated charities, and the Companies Act 1985 and the Company Law Reform Bill currently being debated elsewhere in the House cover incorporated charities, giving them very similar responsibilities. It is important to clarify the duties of trustees, so it is worth saying that the Charity Commission has produced a popular and well respected booklet called “The Essential Trustee: What you need to know”, which covers the responsibilities and duties of trustees. The hon. Gentleman raises an important issue and the main things to say is that it is set out clearly in documents available to trustees. I hope that he will withdraw the new clause.

Peter Bottomley (Conservative, Worthing West)

May I follow the Minister by saying that his words about the booklet “The Essential Trustee” will be warmly endorsed across the House? The Charity Commission, which produced it, has done a service to trustees, and those who have presented it have put it in an accessible form. They give a brief introduction and then expand on what people need to know. It is one of the examples of the Charity Commission doing its job well and allowing trustees to do theirs better.

Andrew Turner (Conservative, Isle of Wight)

I am grateful to the Minister for his explanation. I beg to ask leave to withdraw the motion.

New Clause 6

James Duddridge (Conservative, Rochford and Southend East)

I beg to move, That the clause be read a Second time.

It is a pleasure as always, Mr. Gale, to serve under your chairmanship. I wish to be brief but I shall touch on the matter, which I raised on Second Reading, of people with learning disabilities being unable to serve as trustees. I have had an awful lot of conflicting advice, despite the reassurances on Second Reading that such people could stand. One of my researchers phoned the Charity Commission yesterday and explained the problem, and the Charity Commission said, “Yes, absolutely, people with disabilities can stand as trustees.” My researcher asked, “People with learning disabilities?” and the reply was, “No, definitely not.” The commission then said that maybe they could. We need more clarity.

The matter seems to hang on the words:

“A trustee shall cease to hold office if he or she becomes incapable by reason of mental disorder, illness or injury of managing his own affairs.”

That is quite an old-fashioned, paternalistic and pejorative view of people with disabilities. Even if he cannot support the new clause, it would be good if the Minister could find some way to support the underlying principle.

Martin Horwood (Liberal Democrat, Cheltenham)

Briefly, I wish to commend the spirit of the new clause. I reassure the hon. Member for Rochford and Southend, East, that even under current charity law there is latitude for trustees to be appointed in such circumstances. My own experience of the Alzheimer’s Society, which deals not only with Alzheimer’s disease but with other forms of dementia, included the moment when the first person with dementia was appointed as a trustee. His business experience, intelligence and different perspective on the running of the charity was incredibly valuable and he was a very effective trustee. The nature of his dementia did not preclude him from involvement in any of the charity’s decision making. I am not sure that the hon. Gentleman’s fears are well founded, but I commend to the Minister the spirit of the new clause.

Ed Miliband (Labour, Doncaster North)

We all owe a debt to the hon. Member for Rochford and Southend, East for raising the issue. I have a few things to say on it.

On Second Reading, the hon. Gentleman said that his worry was prompted by the situation of the SHIELDS—supporting, helping, informing everyone with learning disabilities in Southend—parliament, an advocacy organisation of which he is a trustee. Mandy Smedley, the administrator of the SHIELDS parliament received advice from the commission that people with learning difficulties cannot be charity trustees. The commission looked into that and has confirmed that the advice given through its telephone help line was incorrect. It will be writing to her to apologise and to confirm the legal position.

I have discussed the matter raised by the hon. Gentleman with representatives of the commission since Second Reading. The commission needs to be more aware of the issue in the future and must ensure that proper guidance is given. To that end, I hope that several things happen, the first of which is that the commission will write to the hon. Gentleman and set out the position more clearly. Secondly, it will consider updating the document “Users on Board”, which is about users of charities becoming trustees, to make it absolutely clear that people with learning disabilities are not excluded from being trustees, but, indeed, encouraged to be trustees as part of its commitment to diversity. It will also look at updating other documents, including “Finding New Trustees”, to take account of such issues. The latter document will not be updated so quickly, but the commission will be making quick progress to update “Users on Board”.

James Duddridge (Conservative, Rochford and Southend East)

Specifically with the “Users on Board” document, will the Parliamentary Secretary consider the duties of existing trustees when appointing other trustees? At present, it says that it is unfair to impose on someone a range of duties that a person cannot properly understand or does not want to carry out. That general guidance to existing trustees caused some confusion, too.

Ed Miliband (Labour, Doncaster North)

I shall definitely look into that.

Tom Levitt (Labour, High Peak)

With all due respect to the hon. Member for Rochford and Southend, East, who is doing the Committee a service by raising the matter, he has confused learning disability with the incapacity to make decisions on one’s own rights. There is a huge difference in those two definitions. While there may be a grey area in between them, we must not assume that those with learning difficulties are not capable of making decisions in their own right. Will my hon. Friend the Parliamentary Secretary comment on a situation in which an existing trustee had a stroke and a power of attorney is appointed? Would the person who acts as power of attorney be able to act for the trustee under such circumstances?

Ed Miliband (Labour, Doncaster North)

As I understand it, that person would be able to do that.

James Duddridge (Conservative, Rochford and Southend East)

Perhaps the Parliamentary Secretary will agree that I was reflecting on the confusion in the documentation between someone with a learning disability and not being able to make a decision. I was not suggesting anything untoward.

Ed Miliband (Labour, Doncaster North)

I agree with the hon. Gentleman. The sins are mainly those of omission in the Charity Commission’s documents rather than it saying the wrong thing. The omission has obviously caused confusion even to some commission staff, but action will be taken to ensure that the document is corrected. We should all be grateful to him for raising such an important issue.

James Duddridge (Conservative, Rochford and Southend East)

I beg to ask leave to withdraw the motion.

New Clause 7

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move, That the clause be read a Second time.

The purpose behind the new clause is to deal with what might be a slight gap in charity law—[Interruption.] The Minister is already nodding his head vigorously. Sorry, I meant that he is shaking his head vigorously. The new clause was the result of discussions with a learned and noble Friend who had debated the Charity Bill at length in another place. When discussing the public benefit test, he had realised the possible implications of the loss of charitable status. The assumption of many people would be that an institution that lost its charitable status for whatever reason would simply carry on in a non-charitable form. However, that would not be the case because the assets that it had employed as a charity were given for a charitable purpose and must in law be applied to a charitable purpose. They would not be available to the non-charitable institution. In the case of fixed assets, such as a significant building, that would be a major issue.

The purpose behind the amendment is to clarify what is already the intent—and is certainly the commission’s intent—to avoid the loss of charitable status, that continuity and the interests of the beneficiary were ideal and that every step should be taken to avoid this happening.

In the event of loss of charitable status happening, the clause makes clear that the desirable outcome is not the collapse of the institution and the redeployment of its assets to another charitable purpose, whether cy-prÃ(c)s or not, but the continuity of the institution—its name, public reputation and the interests of its beneficiaries.

Those responsible for the charitable assets would have a duty to try and recreate the charity within the terms of charity law and passing whatever public benefit test or whatever other reason it was that they had failed in their charitable status in the first place. My noble and learned Friend was convinced that this is a gap in charity law. However, if the Minister can reassure me, I would happily withdraw the new clause.

Peter Bottomley (Conservative, Worthing West)

If I understand the new clause and the explanation that the hon. Gentleman has given—he has made a fair speech—I do not agree with his intent. If an organisation has been a charity and has been held to have a charitable purpose, because of this change of law—which frankly, I do not think is necessary; I prefer to assume that both education and religion are charitable, but that is not the situation that we are in—it is perfectly possible that an organisation that has operated as a charity with excepted charitable purposes for decades or even hundreds of years may find itself ruled not to be charitable.

One circumstance, which the new clause is aimed at, is for the trustees to accept it as a modern charity. The alternative is to say that is not why we exist, we want to go on doing what we have been doing for decades or centuries, even though we are now to be modernised and told we are not a charity. In those circumstances, it is not right that all their assets—their name, property and endowments—should be taken from them and given to something that is still excepted as a charity.

Martin Horwood (Liberal Democrat, Cheltenham)

I hesitate to intervene on the hon. Gentleman and ask him about something about which he may be wrong. Once the assets have been given for a charitable purpose, they must be applied to that charitable purpose. If that institution ceases to be charitable, it cannot use them under any circumstances.

Peter Bottomley (Conservative, Worthing West)

That is one of the reasons whyI might do a disservice; I know that I have a communication problem. I need to go on and attempt to perfect what I am trying to say.

Let us suppose that donor Bottomley in the 1660s had said, “I want my money to establish an institution for purposes that are acceptably charitable in the 17th, 18th, 19th and 20th centuries.” There is a tradition of what the purpose is and it is accepted. Yet because of this change of law—we are changing the law and potentially redrawing the boundaries of what is charitable—Bottomley’s donation should be allowed to continue for the purpose for which it is given. The fact that it is charitable is a secondary factor. I argue that, in those circumstances, it should be allowed for the present trustees to meet the purpose for which the trust was established. That is the problem. I contend that it contradicts what the hon. Member has put forward in his new clause. At some stage it would be useful to hear other people’s views on that.

If I can make my point more clearly, I do not want to get involved in the independent school issue. I do not want to try to imagine the circumstances in which the Chancellor might so take against an Oxford college, which is going to have some kind of regulation or is part of the exemption that we have dealt with already—so I should not go into that too far—that he wants to say, “I am going to try to get the Charity Commission to say that the charitable purpose is not sufficient”. If there were then a review, and it decided that the public benefit was not great enough, and so the college’s charitable status was lost, what would happen to it?

Would the college be told that all the fellows who are the society, who are the trustees, are going to be displaced and the Chancellor’s friends from some other university are going to be brought in? Or would there be an advertisement and a public appointments commission, with head-hunters being brought in, to decide, once a society had been created, who should be the research fellows and what tenure each of them should have—all because the charitable purpose has been redefined? It strikes me that the hon. Gentleman needs a bit of help on this.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful to the hon. Gentleman. I may have underestimated the power and intellect behind his argument, because he is right. The weakness in my new clause is that it says that where charitable status is withdrawn from any organisation or institution

“assets...must be deployed or protected for the charitable purpose”,

but it does not specify whether those assets are charitable under the new law. If they are considered to be charitable—if they were given for an obviously beneficial, philanthropic purpose that qualifies as charitable even under the new public benefit test—what I was saying does apply and those assets would have to be deployed for a charitable purpose and could not be carried forward to the new, now non-charitable organisation. However, if those assets had been charitable, but are not now charitable because, as the hon. Gentleman said, they were given for a purpose that was deemed to be charitable in the 17th century but is not deemed to be so under the new 21st century law, there is a problem, which he has correctly identified, and I share his sentiment.

Peter Bottomley (Conservative, Worthing West)

Perhaps there is a better way of putting it. Will the Minister reflect in the next few months on whether, in the rare circumstances in which a charity cannot maintain its charitable status, which will not be common unless a coach and horses is driven through independent education, and when it is clear what the donor—the person who settled the trust—intended and there is a conflict between that intention and the new circumstances that have come about because of this legislation, there can be some way of settling whether the purposes must be changed to remain charitable, or whether the purposes can be maintained and the assets used? If the Minister is adamant, Report is going to be rather more interesting than it would otherwise be. What I am really trying to say is that I do not support the hon. Gentleman’s new clause, assuming that I have properly understood it.

Ed Miliband (Labour, Doncaster North)

I thank the whole Committee for this interesting debate. Let me start with the legal base, which is really the subject of the amendment, although it clearly goes much wider than that. I can provide the whole Committee with an explanation by quoting from the little-known Charity Commission document, “Maintenance of an Accurate Register of Charities”. At paragraph 31, it says:

“In law, assets held on a charitable trust are irrevocably dedicated to charitable purposes. So, if trustees are unable or unwilling themselves to arrange for changes to their charity’s objects so that these are exclusively charitable, then they must apply to us to make a cy-près scheme directing that the assets held on trust are used for other charitable purposes as near as possible to the original purposes of the institution. We can help trustees in making such an application.”

The basis for that is in common law.

It is worth pointing out that it is wrong to say that charitable status is “withdrawn” from an organisation. That is the word that the hon. Gentleman uses in his amendment. It is a bit of a logic-chopping point, but charitable status is not like a licence that can be granted and withdrawn. An organisation is either inherently a charity or not, depending on whether the purposes for which it exists are charitable and whether it is for the public benefit. In registering a charity, the commission is not granting charitable status to an organisation, but recognising that it is inherently charitable, having legally assessed its purposes and the public benefit.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful to the Minister. I agree with his interpretation; perhaps the use of the word “withdrawn” was unwise drafting. Nevertheless, as the hon. Member for Worthing, West has observed, we are in the process of changing the law, and it is possible that an institution that was charitable may no longer be so. It might be that charitable status is lost, rather than withdrawn. None the less, charitable status could be held to have been lost—the change is possible.

Ed Miliband (Labour, Doncaster North)

It is difficult to understand, but loss of charitable status is already possible—the public benefit test exists now. That takes me on to something that I was going to say about what happens when an organisation is deemed not to be compliant with the charitable purpose and public benefit requirements, which addresses the point made by the hon. Member for Worthing, West. In that case, action must be taken to get the institution back into charitable status, and that is possible in most cases. It is not usually inherently impossible for the institution to move back into charitable status. In the few cases in which that cannot be done, the assets must be dealt with by some form of cy-près variation of the charitable purposes, but that is the already the situation now.

The hon. Gentleman asked was why it is not possible for the institution simply to carry on, not as a charity, but essentially pursuing the same purposes. There are two problems with that. First, it is not fair to the people who gave money, property or whatever to the charity in the first place, who did it on the basis that the institution was a charity that met charitable purposes and provided public benefit. Secondly, loss of charitable status removes not only some tax privileges, but a degree of regulation so that the assets of the charity could then quite easily be disbursed for private profit, because charity law would no longer apply and there would be no regulator for the institution. The wording of the new clause proposed by the hon. Member for Cheltenham is admirable, as are the underlying sentiments, but no organisation would exist to regulate the institution, because the institution would no longer be covered by charity law.

I agree with the hon. Member for Worthing, West that the issue is tricky. The reassurance that I offer to him is that the Charity Commission will in all circumstances endeavour to enable institutions to move back to charitable status if public benefit is no longer met. That must be the Charity Commission’s priority. Only in the most extreme cases in which, dare I say, there is stubbornness or refusal to co-operate would other, more drastic measures be considered.

Peter Bottomley (Conservative, Worthing West)

I know that the Minister’s words are intended to be helpful. It is clear that there should not be an easy way for charity trustees to turn their charity into something non-compliant and non-recognised, otherwise they would be able to just walk away with the assets. That is easily accepted. I suspect that the examples that I have in mind would be rare and difficult to achieve, and I am sure that trustees would in most cases wish to remain compliant. I am sure that if there were a question mark over recognition they would do their best.

Let me cite an odd example, which is not intended to be taken too seriously. The former Member of Parliament for Cambridge University, Henry Lucas, established two trusts. One was a hospital for the elderly in Berkshire, of which I was once a trustee. The other, of which I was not a trustee, established the Lucasian chair of mathematics in Cambridge, which has been held by Isaac Barrow and Isaac Newton and is now held by Stephen Hawking. Were it to be judged that higher mathematics had no public benefit—this is where the exaggeration comes in—it would be perfectly possible for the trustees to be told by the Charity Commission, “You are in danger of ceasing to be recognised so you should switch to something else such as nursing, so that the Lucasian chair of mathematics becomes the Lucasian chair of nursing.” The trustees would respond, “Henry Lucas said that he wanted mathematics. There is a tradition of mathematics and a chair of mathematics it should remain.” I know that that is improbable, but it is the sort of issue that I have in mind. I hope that the Minister will think about that and accept that there is something in what I am saying: that there would need to be an adjudicating authority. It is not easy, but I think that there is a serious problem.

Roger Gale (Conservative, North Thanet)

The hon. Gentleman is in danger of winning the award for the longest intervention in any Committee.

Ed Miliband (Labour, Doncaster North)

In the hon. Gentleman’s defence, I think that he presumed that I had finished.

The hon. Gentleman’s point is interesting. The answer is that one cannot possibly imagine the circumstances in which the Charity Commission would say that an organisation established for a chair of mathematics should change to a chair of nursing. As earlier discussions showed, the whole point about cy-près is that if the old purposes are either not for the public benefit or cannot be carried out, the new purposes must be as close as possible to the original intent of the gift. I do not think that anyone can suggest that the gift in that case was intended for a chair of nursing.

I am happy for that discussion to continue outside the Committee. Hon. Members must admit that I have been very flexible so far, but on that matter I am inclined to be inflexible. The Committee holds the nature of charity law in trust and I am being invited down a dangerous road whereby an organisation that did not meet the public benefit test could simply say, “Well, in that case we will go outside charity law.” I know that that is not what the hon. Member for Cheltenham was suggesting, but that would betray the history of the organisation and the nature of charitable law. So I am going to be intransigent, but as always we shall listen to representations.

Martin Horwood (Liberal Democrat, Cheltenham)

I am disappointed that the Minister is inclined to move from generosity to intransigence at this stage in the Committee’s deliberations.

May I offer an alternative example to the one offered by the hon. Member for Worthing, West? The Joseph Rowntree trusts were established for a number of purposes, some of which were specifically charitable and designed to fall within the charitable remit. However, one of them—I cannot remember which one because the names are very similar—was designed specifically to fall outside charity law, yet under the new heads of charity, it might well qualify as charitable. It is equally possible that under a different Administration the law will change again, causing it to lose that charitable status. As we change legislation, it is eminently possible that organisations that were charitable—[Interruption.] The Minister is shaking his head. Perhaps he could explain the error in my argument.

Ed Miliband (Labour, Doncaster North)

This will be a legal one-way street. The hon. Gentleman is right that an organisation that was not set up for charitable purposes could become charitable if conventions of the time change. However, once an organisation starts to benefit from charitable status, it should not be able to take those benefits outside charity law. That is why it is a one-way street.

Martin Horwood (Liberal Democrat, Cheltenham)

That was not really the point that I was making. An institution’s charitable status might change, by virtue not of its changing its activities, but of a change in the law. I was simply supporting the point made by the hon. Member for Worthing, West.

The Minister was right in describing the ideal process, which is that the loss of charitable status should be the last resort and that everything should be done by the Charity Commission to avoid that happening. It would require a succession of intransigent trustees to make it happen. However, it will be possible, as it is now, to lose charitable status. As we change the basis of charitable status, that is slightly more possible than it has been in the past.

The question is what happens to the assets of the charity in that event. The Minister talked about assets falling outside charity law. My new clause does not address that. It specifically states that

“the assets...must be deployed or protected for the charitable purpose for which they were originally constituted”,

so I am addressing what happens to charitable assets that must still be applied for charitable purposes. I have tried to frame a new clause that would explicitly direct those responsible away from the cy-près route towards the reconstitution of the charitable institution or the charitable purposes as originally constituted.

The hon. Member for Worthing, West has identified a parallel and equal problem with assets that might have been given first for the purpose of the institution and only secondly as charitable assets and therefore might well be considered not charitable under a change in the law. There is also a lack of clarity about what might happen to those assets, as the Minister, too, has shown.

Peter Bottomley (Conservative, Worthing West)

First, just to fill a gap, I should say that it was the Joseph Rowntree Reform Trust that the hon. Gentleman referred to. Secondly, does he believe that the Minister should reflect on the fact that it would be open to the Government to change the law, whether through Parliament or under one of the provisions that we discussed earlier, so that various bodies that were not charities—this is a separate point from the one that I made before—could have charitable status? There would be a responsibility on the trustees to apply for it and then, if the Government changed the law again or the Charity Commission changed the way in which it thought of things, they would be caught and stuck.

Martin Horwood (Liberal Democrat, Cheltenham)

The hon. Gentleman makes more elegantly the point that I was struggling to make that charitable status can change and what happens to assets in the event of loss of charitable status is a serious issue. The hon. Gentleman and the Minister have pointed out technical problems with the drafting of my new clause, so I am content to withdraw the motion, but I hope that the debate has shown that there is a serious issue that the Minister might care to reflect on further. I beg to ask leave to withdraw the motion.

Roger Gale (Conservative, North Thanet)

Order. Given that the Committee is making admirable progress, this is an appropriate moment to remind the Committee that in its programme motion of Tuesday 4 July it said that the proceedings shall, so far as not previously concluded, be brought to a conclusion at 4 pm on Thursday 13 July. I am trying to hold the Committee to its own admonition. That will be achieved only if speeches are relatively brief.

New Clause 8

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move, That the clause be read a Second time.

I am grateful for that reminder, Mr. Gale, and I shall do my best to comply with it. The new clause is designed to place on a statutory basis the institution of the independent complaints reviewer. The office already exists, but the new clause would facilitate significant alterations to the current arrangements. There is an accusation that the independent complaints reviewer is, to an extent, the creature of the commission. If it is to continue to exist and to be useful even after the Bill creates the charity tribunal—we also have the alternative of the ombudsman route—some changes to the status of the independent reviewer could be instituted, and the new clause is designed to effect those.

In many respects, the new clause is self-explanatory. In opposing a similar suggestion in another place, the Minister, Lord Bassam of Brighton, suggested that the ombudsman route was advantageous. However, in practice that is not really available to many charities. As I said, in many respects the new clause speaks for itself and I will not detain the Committee any longer in proposing it, but I would be interested to hear hon. Members’ views on it.

Ed Miliband (Labour, Doncaster North)

The problem with the new clause is that it would give powers to the independent complaints reviewer that already exist for the parliamentary ombudsman. The danger is that it would confuse the parliamentary ombudsman’s situation. I refer the hon. Gentleman to the 2004-05 report by Jodi Berg, the independent complaints reviewer, who says on page 3:

“In particular, an argument has been made for a new statutory office of Independent Complaints Reviewer, changing the basis of appointment and affording the office holder the power to award substantive compensation to those adversely affected by the Commission’s actions or omissions.

My personal view is that some caution needs to be exercised in relation to this proposal. There is already a statutory avenue for complaints about the Charity Commission, that being the Parliamentary and Health Service Ombudsman, who is able to award redress for financial loss where she deems it necessary to do so. It is doubtful whether a potentially overlapping office would add anything for the citizen other than confusion. My own role, in common with other similar offices, is based on agreed terms of reference which underline my independence and authority.”

I tend to agree with the ICR.

There is a response open to the hon. Member for Cheltenham. He could ask, “How much power does the parliamentary ombudsman have, and will Government accept her recommendations?” I point out that the Charity Commission has always accepted the parliamentary ombudsman’s recommendations, which is an important record. I cannot speak for the commission, but I think that it is good that it has done so. I do not think that the new clause is advisable, and I hope that he will withdraw it.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful to the Minister for his comments. He needs to understand why the parliamentary ombudsman route is not available in practice for many charities. The independent complaints reviewer is not empowered even to recommend that the commission pay compensation where a charity has suffered loss as a result of its practices. It also routinely refuses to take up cases where there is a legal possibility of pursuing the commission for compensation through the courts. In practice, that route is potentially ruinously expensive for charities and therefore not a realistic option, but it effectively bars them from going to the ombudsman.

The proof of the pudding is in what has happenedin the past decade. Since the introduction of the Charities Act 1993, the parliamentary ombudsmanhas investigated only eight complaints about the commission’s conduct, upholding three and recommending financial compensation in two cases. There are clear grounds for the new clause and the financial compensation powers that I am proposing. I hope that if I withdraw it, the Minister will reflect on the role of the independent complaints review and the possibility of strengthening its powers, making access easier and introducing powers of financial compensation.

New Clause 9

New Clause 10

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move, That the clause be read a Second time.

The new clause was recommended by a learned friend, and I should be interested to hear the Minister’s response to it.

Ed Miliband (Labour, Doncaster North)

The new clause is about delegation, some of which I suspect has already taken place from Lord Phillips to the hon. Gentleman.

The first subsection of the new clause is unnecessary, because the law already allows charity trustees to delegate appropriately. The Charity Commission’s publication “The Essential Trustee: What You Need to Know” puts it like this:

“Trustees can generally delegate certain powers to agents or employees, but will and must always retain the ultimate responsibility for running the charity.”

In the context of section 36 of the 1993 Act, it means that in practice, trustees must personally make the initial decision to sell a property and the final decision to sell it on particular terms. In between, the trustees may and routinely do delegate the administration of the sale to their staff. That balance is right.

The second subsection of the new clause would remove important safeguards on sales of property worth less than £500,000. Since the hon. Gentleman appears to want to allow charities to sell their property without having it properly valued, one wonders how they will know how much it is worth in the first place. However, the serious point is that although he, as the beneficial owner of his own house, is free to sell it at whatever price he likes, the trustees of a charity do not have similar freedom. They must obtain and consider a written report from a qualified surveyor, and they are under a duty to dispose of their land only on the best terms.

The objection to the new clause is that essentially the duties on trustees to take expert advice and to sell only on the best terms reasonably obtainable should not be disapplied as the new clause suggests. They are important safeguards for the disposition of charity lands. However, I have a piece of good news. I understand the amendment’s deregulatory intent, and I undertake to review the regulations that set out what a surveyor’s report must contain. They were made in 1992 and may be seen as over-prescriptive, especially for smaller sales. Our review would aim to reduce the level of detailed prescription in the regulations.

Peter Bottomley (Conservative, Worthing West)

If the hon. Member for Cheltenham does not mind me saying so, the Minister is right. However, the Minister might want to include the exception—I am not sure how far it is covered by the 1992 provisions—that if a charity sells property to another charity, it does not have to get the best market price. It would be interesting to know whether some of the regulations under the Charities Act 1992 apply.

Ed Miliband (Labour, Doncaster North)

That process is already possible, but I shall consider the hon. Gentleman’s point. On that basis, I hope that the hon. Member for Cheltenham is happy-ish, and will withdraw his new clause.

Martin Horwood (Liberal Democrat, Cheltenham)

I am interested in the Minister’s response. I was surprised by his response to the first part of the new clause, which talks about the power to delegate to a proper officer. Part of the problem is that properties can be disposed of once in a blue moon by some charities, but when properties are left as part of a legacy, as they frequently are, the requirement for the trustees always to take the decision can be extremely onerous. I have talked to charities that were under the impression that that was the requirement in law, but the Minister’s response appears to go against it. Nevertheless, if that is the legal situation, and he has put it on the record, they might well be reassured.

In the second half of the new clause, the value of £500,000 is only indicative. It then says,

“or a sum afterwards determined”

by the Secretary of State. It is a rare and generous example of me offering rather than withdrawing latitude to the Secretary of State. However, I am reassured by the Minister’s statement, and I beg to ask leave to withdraw the new clause.

New Clause 11

Andrew Turner (Conservative, Isle of Wight)

I beg to move, That the clause be read a Second time.

I would be grateful if the Minister told me that the new clause complied with the Cheltenham principle, but I believe that it does not. It is intended to provide an additional power—although not, I emphasise, a duty—for local authorities to remit any fee that is payable to them by a charity, or to draw up and operate a scheme of remittances for such fees. I shall illustrate it, as one so often does, by reference to a local example.

The people who run the Chale show, an agricultural show on the Isle of Wight, found that under the new licensing regime they had to pay £1,000 for a licence. Because their expected gate now exceeds the threshold set out in the Isle of Wight Acts, they had to comply with the requirements of those Acts as well, which cost another £3,000.

Peter Bottomley (Conservative, Worthing West)

Was the Isle of Wight Act pushed through by one of my hon. Friend’s predecessors, Mark Woodnutt, to stop an Isle of Wight pop festival after the three successful ones held about 30 years ago?

Andrew Turner (Conservative, Isle of Wight)

It was indeed. I should say that it has been amended twice since then, and the Isle of Wight has once again started holding extremely successful pop festivals, the most recent of which I did not attend because I could hear and enjoy it from my back garden. I attended the previous one and enjoyed it immensely. Some 60,000 people came this year, and I recommend the festivals to all hon. Members.

To get back to—

Roger Gale (Conservative, North Thanet)

The new clause.

Andrew Turner (Conservative, Isle of Wight)

When I raised the matter with councillors and officers of the Isle of Wight council, they told me they had no power to remit any fee payable under the Licensing Act 2003. If that is untrue, I will be glad to hear it. It occurred to me that they may also find themselves without the power to remit fees payable under other Acts, and that we ought to give them that power. It would be entirely discretionary; we are not forcing any local authority to spend any more money than it is currently spending.

Peter Bottomley (Conservative, Worthing West)

May I give wholehearted support to my hon. Friend’s new clause? A number of examples can properly be used. For example, on Remembrance Sunday, when organisations including the Royal British Legion want a temporary interruption to traffic, a regulation requires them to apply for a full traffic management order, and a fee is involved. Another example is that of a village that is going to have a popular regatta and wants to ban traffic on a road. In the past, that was done by custom and practice, but the law has been tightened up so that people have to apply for a temporary road closure order.

The rest of the debate is in Hansard.