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Mr. Eric Forth (Bromley and Chislehurst): Will the hon. Gentleman concede that there is at least one possible down side to his proposals? In order to raise the very large amount of money that would be required for such an endowment to be viable and to produce the necessary income stream, one would have to deny many other good causes that money in the short term. So at the very least some difficult choices will have to be made, and in order to achieve long-term benefits many short-term sacrifices will potentially have to be made.

Dr. Gibson: The right hon. Gentleman is absolutely correct to say that choices and assessments will have to be made to decide who will gain the money and so on. However, my proposals will not deny any organisation

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the right to apply for those grants, however big or small the need might be. The only factor is the distribution of the money and the competition for it. That will be determined by the trustees and the boards and the information that they receive about different charities--such as how well they are organised and the expertise of their trustees. There will always be such choices and they apply to these issues too.

NESTA is free from regular cash rounds or agreements with any Government Department. The programmes have to be in line with statutory mission statements. NESTA has a board and has tax status similar to a charity's. Its trustees are appointed by the Secretary of State, who has powers to issue directions to the endowment in respect of its financial conduct. The similarity to the "We Care" appeal is obvious. Both organisations target areas, groups and individuals where there is a need for support.

It is interesting that out of eight national lottery distributing bodies, only the charities board is prevented outright from granting endowments, although others are given guidelines that they should carefully consider such requests.

So what precisely is the difficulty, and how should we overcome it? There is an ambiguous clause in the National Lottery etc. Act 1993. Section 38 (1) states:

"The National Lottery Charities Board may make out of any money it receives grants for meeting the expenditure of charities."

The guidelines to other boards state that they may "fund or assist in funding" projects. Clearly, an endowment fund is not regarded as expenditure of a charity.

I have not been able to unearth the reasons for this anomaly, but I understand that when laws are drawn up, consideration of every event and every detail cannot always be scrutinised and we learn by operating Acts over a period of time. The result is that the board can only make specific grants over a specific period of time. The "We Care" appeal sets out to give moneys to various projects without a fixed time dimension.

My right hon. Friend the Secretary of State for Culture, Media and Sport said:

"The National Lottery will now be able to respond more effectively to the needs of every community. I had two very single aims in reforming the lottery--to ensure people have confidence in the way it is run and to ensure that the money it raises is allocated fairly and goes where it is needed."

Mr. John Greenway (Ryedale): As we have discussed the matter, the hon. Gentleman knows our view on the Bill and I commend him for his support for the charity that he has espoused. As he is bringing his remarks to a conclusion, can he tell us how far the appeal has progressed in trying to raise £1 million and what sum of money it might apply for in grant from the National Lottery Charities Board were the Bill to be enacted?

Dr. Gibson: I thank the hon. Gentleman for his intervention. So far the appeal has accrued something like £550,000. Of course it would love to get the rest through a lottery grant. However, it continues to receive support and help and in a month or three months' time after Members of Parliament strut their stuff at local concerts and so on, who knows how much more will come in? [Interruption.] Our side will certainly be there. An all-Labour all singing, all dancing Aristosquits concert is a wonderful idea. I think that the appeal will be asking for at least £200,000 to spin out over some time.

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My right hon. Friend the Secretary of State told the Select Committee on Culture, Media and Sport that my proposed changes appeared to be sensible. The amendments would allow endowment-funded charities to apply. We believe that endowments must be restricted to charities rather than extended to similar benevolent or philanthropic institutions. That is because English law does not recognise purpose trusts unless they are also charities and therefore does not recognise gifts to such institutions unless they are used for charitable purposes. Grants to such institutions or charitable projects for immediate expenditure are still acceptable, as countenanced by the 1993 Act, so they are not excluded, but the retention of grants by such bodies for purposes which are not desirable is a problem.

Let me define "charitable", "benevolent" and "philanthropic" as they have been addressed in court cases. There are differences between charitable and benevolent. I have really enjoyed getting into the legal processes and definitions. Thank goodness I never wanted to be a lawyer, and I would never let any of my children be lawyers. There is an absolute mish-mash of definition and counter- definition.

"Picarda", a famous legal publication, contains the following definition:

"The word 'benevolent' is a word of somewhat shadowy meaning. One thing, however, is certain. There is judicial unanimity that 'benevolent' goes beyond what is charitable in law. It is not synonymous with 'charitable'. For that reason, as noted elsewhere, gifts for charitable or benevolent purposes have failed as going beyond what is exclusively charitable, even though gifts for 'charitable and benevolent purposes' have been upheld."

I am absolutely certain that hon. Members understood that perfectly.

Mr. Fabricant: On the subject of "benevolent", I have one little reservation about the hon. Gentleman's Bill, although I broadly support it. He will be aware that there are private benevolent organisations. In his own area, Bonds of Norwich, which is part of the John Lewis Partnership, gives to charity. Does the hon. Gentleman share my concern that if the Bill is enacted, organisations such as the John Lewis Partnership may no longer feel the need to give, as they will assume that there is already a structure in place to replace the good works that they do?

Dr. Gibson: I should stress that there is nothing to prevent organisations from applying for lottery money. They are not restricted by the provisions of the 1993 Act. That will not change, but the problem will persist. I shall address the hon. Gentleman's point later in my speech.

I return to the standard legal definitions which demonstrate the nonsense of how the whole process operates:

"In Income Tax Comrs v. Pemsel (1891), Lord Bramwell, attempting to draw the distinction between charitable and benevolent, said: 'I think there is some fund for providing oysters at one of the Inns of Court for the Benchers. This, however benevolent, would hardly be called charitable'. It may, however, be hyperbole to classify such a purpose as benevolent. And his example of a trust to provide a band of music on a village green is probably charitable rather than benevolent.


The Shorter Oxford Dictionary defines the word in relation to persons as connoting of a kindly disposition, charitable, generous, and its Latin origins indicate a notion of well wishing. An appeal to send a particular child abroad for a medical operation has been instanced as directed to a benevolent rather than a charitable end."

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I am sure that right hon. and hon. Members are now much more aware of the definitions. I dare not penetrate into the definitions of philanthropy as they would confuse us even more at this stage.

Section 38 of the National Lottery etc. Act 1993 requires adaptation. I have had advice from Government lawyers and from Mr. Peter Furnivall of Mill & Reeve solicitors in Norwich, which has been most welcome. Section 44 of the Act describes charitable expenditure as expenditure by charities or similar bodies, as compared, for instance, with investment of moneys by charities in order to produce an income stream for future expenditure. Section 22(3)(d) restricts the use of lottery money to charitable expenditure. If we want money to go to charities such as the "We Care" appeal, the definition of charitable expenditure will have to be changed or the terms of section 22 will have to be extended.

The Bill adds a new subsection (1)(b) to section 38. Perhaps there was no need to repeat the whole section, but the key aspect is that the additional words extend grants to endowment, which means a gift that can be used for expenditure or for retention as capital. The Charities Act 1993 says that a permanent endowment is money held by a charity subject to the restriction that it must be expended for the purposes of the charity and that only the income from it may be so expended, and the capital must be retained permanently. That is clearly defined in the Clergy Orphan Corporation case of 1894 and reaffirmed in the Charities Act 1993. The case of Smith v. Kerr of 1899 cross-refers to the Charitable Uses Act 1601.

We have amended the definition of charitable expenditure, so there is no need to make any change at all to the wording of section 22. Charitable expenditure will no longer mean expenditure by charitable or similar bodies only but will extend to expenditure on grants to such bodies. That is an essential change, meaning that endowment can be retained as capital rather than spent from year to year. Indeed, if the endowment is defined as permanent, it cannot be spent at all, and must be retained for as long as the charity exists in its present form.

There is a difference between an endowment fund and a permanent endowment fund. When Opposition Members want to endow universities, they had better get the type of endowment right.

This is a complex area, but I have had good legal advice and choices have been made. I want to give the charities board more flexibility. The change may open the floodgates to requests for endowments from a host of charities, but it is already open to all charities or benevolent or philanthropic institutions to apply to the board for money for immediate charitable expenditure. The legal change that I seek makes no difference to that. The board already has complete discretion about what grants to make to which bodies and under what terms. It may be asked how charities are to be dissolved and whether the trustees have legal responsibilities.

The Charity Commission document CC3 defines the trustees' duties very carefully. It refers to trustees' fundraising responsibilities and their powers in respect of investments, property, accounts and so on. If a charity is permanently endowed and the governing document contains no power of dissolution, it cannot usefully be wound up, but if the trustees are satisfied that it no longer serves a useful purpose--the one for which it was established, and which is now fulfilled by other means--

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the commissioners can make a scheme to amalgamate it with other charities. The trustees are under a duty to apply to the commission for a scheme to change the purposes of the charity. The five commissioners are appointed by the Home Secretary and are answerable to the courts, the Home Secretary and Parliament.

The Bill gives the charities board more flexibility in supporting both short-term and long-term projects. People will be aware of the problems for carers. As they increase in number, in line with our increasing elderly population, their organisations will need the support of lottery money. People feel that the lottery money is theirs and they want to see it coming their way. It is our duty to find ways of overcoming the restrictions. I am sure that the measure will be popular and will help to support this amazing group of people who do so much for our country. Eventually, it will also open up help to other groups that want to retain their presence in our communities in the long term, providing much-needed support and help.

I pay tribute to the right hon. Member for South Norfolk. We thought that he had made his last speech, but I look forward to his making a further speech in support of the Bill. He has done a marvellous job for Norfolk.

I commend the Bill to the House and hope that it will find support.

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