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4 Apr 2003 : Column 1170—continued
9.45 am
Mr. Todd: I am afraid that I am a sad soul who is not an expert on charitable activity on individual Channel Islands, and would certainly not seek to comment on how it may differ in different islands. However, presumably that matter was given careful thought by the Channel Islands authorities when they decided to support the amendments. I hope that the House, too, will support the amendments.
Mr. Stephen O'Brien: It may be uninteresting but helpful none the less to start with the point made in the intervention by the hon. Member for High Peak (Mr. Levitt). If I recall correctly from my dim and distant days of studying law at the same Cambridge college as the Bill's promoter, the definition in the English legal system of the Channel Islands includes such places as Sark. It is possible that there are different charitable purposes on Sark, as it has no motorised vehicular traffic, so it may need a different definition to ensure that that is excluded. I do not know that for a fact, but it might be helpful in showing that there may be a difference. I daresay that the hon. Member for South Derbyshire (Mr. Todd) has thought the matter through, as have the Channel Islands authorities.
Mr. Levitt: The hon. Gentleman will be aware that the Government strategy unit has proposed changes to charity law including a 10-point definition of charitable purposes—I may catch your eye later, Mr. Deputy Speaker, to talk about that. I hesitate to get the hon. Gentleman to suggest again what the Channel Islands should be doing, but the process that we are carrying out on the recommendation of the strategy unit to achieve a consistent approach to charities would help to clear up any anomaly.
Mr. O'Brien: The hon. Gentleman makes an important point about the consistency of definition in the operation of the legislation. In moving amendment
No. 5, the hon. Member for South Derbyshire said that the applicability of the Bill to the Channel Islands is not the issue, but it has to make reference to them in the case of societies that are registered there or have them as their place of business. The hon. Member for High Peak made an important point about the need in framing any legislation to seek a level playing field and consistency of approach. During proceedings on the Bill, there has been a debate about whether the Bill pre-empts the report from the strategy unit, formerly the performance and innovation unit, about charities and the voluntary sector. The Minister has consistently assured us that it does not, but it has focused thinking about the report.I was much taken with the point made by the hon. Member for Brighton, Pavilion (Mr. Lepper), who asked about territories beyond the Channel Islands. The Bill's promoter rightly suggested that his hon. Friend was a touch cryptic in seeking to stay in order, but I felt that he may have been trying to explore Delphic territory. Delphi, of course, is a long way from the Channel Islands, so I am not sure that any assistance has been given.
The amendment is important because of the way in which such entities are often based and configured. Can the Minister give an assurance that not only in the strategy unit's work, but in the company law reform work that we expect to come forward in the next Session or shortly thereafter, a consistent approach will be taken to industrial and provident societies, as well as to those that we prefer to call co-operatives and community benefit societies? One aspect of the process that the amendment highlights is that it is not always necessary to have different legislation for those entities, given that we are bringing them into conformity with the broader law as it applies to corporate entities. If we can avoid societies being encompassed by separate statutes, and instead bring them into the body of company law, that would obviously be better. Clearly, the Minister and her advisers will give that careful consideration.
On that basis, I am happy to support the amendment, but it would be helpful to have the assurance that there will be a consistent approach across all corporate entities at a later date.
Mr. Richard Allan (Sheffield, Hallam): The promoter knows that the broad thrust of the Bill has all-party support. It is sensible for the provisions to encompass societies registered in the Channel Islands. Clause 2 deals with duties that will be imposed on charities, so it is important that the definition of bodies included in that broad remit is correct. It is clear which bodies are covered by England and Wales law and Scottish law, but there may be some uncertainty about those registered in the Channel Islands because, as the hon. Member for High Peak (Mr. Levitt) pointed out, the provisions will apply to all the bodies defined as charitable under the Acts of the various islands. That is a broader remit, and I hope the Minister will assure us that we can take it on trust that the bodies that we wish to catch within the Bill's net will be broadly similar, under the various laws of the Channel Islands, to those that would be caught by English and Welsh law and Scottish law.
What is the position of societies registered in the Isle of Man? Are those covered by the Bill or by other English and Welsh law, or do they remain outside the
scope of the Bill, although we have brought in England, Wales, Scotland and now, with the amendments, the Channel Islands? How widely is the net cast?
Ruth Kelly: As I outlined earlier, clauses 2 and 3 seek to make changes to the powers and capacities of societies to facilitate their ability to enter into business transactions. However, there are also exemptions from some of these provisions for societies that are charities. The rationale for that is to make sure that charities' assets are protected and are not used for a purpose for which they were not intended. That is in line with the corresponding provisions that already exist for companies that are charities.
To apply these provisions, we obviously need to define a charity. The Bill, as amended in Committee, already does so for societies registered in England and Wales, or Scotland. Although the Bill does not apply directly to the Channel Islands, we still need to make provision for societies based there that undertake business subject to the law of England and Wales, or Scotland. Following consultation with the Channel Islands authorities, I believe the amendment makes the necessary provisions. I am happy to reassure hon. Gentlemen who raised that point today. I therefore support the amendment.
The Industrial and Provident Societies Act 1965 does not apply to the Isle of Man, but it does apply to the Channel Islands, so they are in slightly different categories. That is why the Bill needs to cover the Channel Islands industrial and provident societies that are charities, but not those registered on the Isle of Man.
Mr. Levitt: I am sorry to keep going on about the matter, but is my hon. Friend saying that it is possible for two charitable companies operating in mainland Britain, in the same environment, carrying out the same functions, one of which is registered in Britain and one of which is registered in the Channel Islands, to operate to two different legal definitions of charitable functions?
Ruth Kelly: I assure my hon. Friend that that is the case, which is why we have had to define a charity for the purposes of the Bill.
On the point raised by the hon. Member for Eddisbury (Mr. O'Brien) about keeping industrial and provident society legislation up to date with company law, it is important to recognise that industrial and provident societies are not companies. However, we are keen to ensure that industrial and provident societies enjoy any new operational flexibilities that are introduced for companies.
Mr. Love: As an adaptation of my earlier question, can my hon. Friend assure the House that there will be a level playing field between charities formed in the Channel Islands and those formed in other parts of the United Kingdom, so that there will be no attraction for some organisations to form themselves in the Channel Islands, rather than in the rest of the United Kingdom?
Ruth Kelly: I shall deal first with the comments of the hon. Member for Eddisbury, and then return to my hon. Friend's question. We are keen to ensure that industrial and provident societies enjoy the same flexibilities as
those that we grant companies in due course. The review of company law being carried out by the Department of Trade and Industry will give the Treasury the opportunity to consider updating a substantial proportion of industrial and provident society legislation through the powers given to us by my hon. Friend the Member for Harrow, West (Mr. Thomas) in his private Member's Bill. Although we cannot start the updating process until company law has changed, we will start thinking about how to modernise industrial and provident society legislation in advance. When we respond fully to the strategy unit's report, we will also bear in mind those areas of industrial and provident society legislation that we consider ripe for reform.
Mr. Gareth Thomas: I was slightly concerned by my hon. Friend's comment to the hon. Member for Eddisbury (Mr. O'Brien) that any future changes to company law would need to be read across for industrial and provident societies. Although I welcome that, I hope she will acknowledge that in many respects company law has already been modernised far ahead of the law for industrial and provident societies. I am thinking particularly of audit and accounting exemptions, which leave industrial and provident societies substantially disadvantaged and having to incur considerable additional costs, in comparison with companies. Can she reassure me that that has not been overlooked?
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