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Hilary Armstrong: The hon. Gentleman might like to wait to hear what I say about that, but I am confident that religion certainly has a charitable purpose and that religious organisations will be able to demonstrate effectively that they are of public benefit. That is the key point of the Bill. Both criteria have to be met. Any organisation that is charitable and produces public benefit is allowed considerable tax concessions, which
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is public money, because otherwise they would be paying that. However, as I say, I am confident that any religion that I have come across would be able to meet both criteria.

The Bill will make improvements—

Bob Spink (Castle Point) (Con): Will the right hon. Lady also reassure universities and the higher education sector that research and knowledge transfer will remain charitable activities in the public benefit?

Hilary Armstrong: I have learned already that there are incredible legal issues here, and I do not want to say anything that will lead me into giving lawyers any more money than they are already entitled to. The hon. Gentleman has wound two questions into his one intervention. One concerns the status of universities, to which I will come later. If, say, they are part of a research programme that a medical charity is undertaking, again they will have to meet the public benefit test, but I am confident that they would do so. As I say, I will come to the particular status of universities later.

The Bill will make improvements in several—

David Taylor (North-West Leicestershire) (Lab/Co-op): Bracketed with my right hon. Friend’s very popular assertion that she does not want the legal profession to have any more money than it already receives, I am sure that it would be equally popular if she were to incorporate private schools in that. Is she minded to accept an amendment from a group of us that would prevent organisations that charge unduly restrictive fees from being granted charitable status? That is just as worthy an aim in this admirable Bill.

Hilary Armstrong: Again, I shall deal with that specifically later in my speech, so I should be extremely grateful if my hon. Friend would hang on until then, when he may wish to intervene again.

The Bill will make improvements—

John Bercow (Buckingham) (Con): Will the right hon. Lady give way?

Hilary Armstrong: I am anxious to get into the meat of my speech, but I will take this further intervention.

John Bercow: I am extremely grateful to the right hon. Lady, who has certainly been very generous at an early stage of her remarks, but I am trying to follow what I think is the chronological sequence of the Bill, and I think that my question is apposite. Are the order-making powers under proposed new clause 3A to the Charities Act 1993, referring to registration of charities, subject to the negative procedure of the House or to its affirmative counterpart; and whichever it is, may we have a draft of the regulations before the Bill’s passage?

Hilary Armstrong: Again, I shall deal with that later in my speech. The hon. Gentleman says that he wants to deal with the Bill in sequence, but I have not yet begun to deal with the Bill—I was still in my preamble.

The Bill will make improvements in several areas of the law and in the regulation of charities. The most
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important improvements concern the definition of “charity”, the constitution, functions and powers of the Charity Commission as regulator and in its relationship with the Government, the creation of a new corporate legal form for charities, which will be called the charitable incorporated organisation, changes to ensure that effective and proportionate regulation applies right across the charitable sector, including those charities which are not currently required to register with the Charity Commission, and the regulation of people who collect in public for charity. I shall deal with each of those specific areas in more detail.

The Bill is the result of a thorough process, including extensive consultation with charities themselves and significant time spent in the other place. I know that many hon. Members are active trustees, volunteers and, indeed, supporters of charities, and they are well aware of the strong support for the Bill across the breadth of the charitable sector.

The Bill originated in a review by the Prime Minister’s strategy unit, which was published in 2002, of charities and the wider not-for-profit sector. We received more than 1,000 responses to the public consultation on that review, and those responses showed clear and strong support for the great majority of the review’s recommendations, which form the main content of the Bill.

The Bill was published in draft in May 2004, and it received thorough pre-legislative scrutiny by a Joint Committee, which was skilfully chaired by my right hon. Friend the Member for Darlington (Mr. Milburn), who is in his place today. The Government accepted more than three quarters of the Joint Committee’s recommendations, and the Bill emerged the better for it.

The Bill was first introduced in December 2004 in another place, where it was extensively debated, and it fell when Parliament was dissolved in April last year for the general election. It was reintroduced at the first opportunity in this Parliament, and it has had more than 60 hours of debate so far.

It has been well over a decade since any significant changes have been made to charity law, and many of the aspects of the current law are considerably older than that. Charity law has simply not kept pace with changes in our society and in the diverse voluntary sector.

The Bill extends to England and Wales, but not to Scotland or Northern Ireland, where charity law is a devolved matter. Even before devolution, there were three different systems of charity regulation in the UK—one for England and Wales, one for Scotland and one for Northern Ireland. In July 2005, the Scottish Parliament passed an Act including many of the reforms that our Charities Bill will make for England and Wales, and similar proposals are being worked up in Northern Ireland. After all those reforms have been enacted, the three systems will continue to be compatible without being identical.

The Charities Bill contains 78 clauses and 10 schedules, and it is divided into four parts. Part 1 of the Bill contains the provisions defining “a charity”, which are very important. Any organisation which falls
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within the definition gains access not only to valuable tax exemptions, but to a special status, which enjoys a high degree of popular trust and confidence.

Richard Burden (Birmingham, Northfield) (Lab): I welcome the Bill, which contains many useful provisions. Will my right hon. Friend comment on one issue concerning definitions? She may be aware that one of the purposes which falls within the definition is the advancement of amateur sport. A number of activities which common sense indicates are sports are often excluded from the definition of being sports by the Charity Commission, including angling, ballooning, billiards, pool, snooker, crossbow shooting, rifle shooting, pistol shooting, flying, gliding, motor sports and parachuting. I declare an interest as a participant in one of those sports—while I am on my feet, I shall declare another interest, because I am married to the chief executive of a national charity.

Hilary Armstrong: My hon. Friend, whose main interest is in motor sport, recognises that we are, for the first time, classing amateur sport as a charitable purpose. In doing so, the main aim was to promote healthy recreation, so sport has been defined as, in many ways, involving physical skill and exertion. I am not sure how much motor sport fulfils that criterion. However, the Charity Commission, in consultation with the Department for Culture, Media and Sport, will be willing to consider any representations on what exactly the addition to charitable purposes will mean. As my hon. Friend suggests, and as hon. Members’ earlier interventions made clear, once one puts any new definition into a Bill, there arise all sorts of questions about its interpretation. One of the aspects that Ministers are struggling with is the possibility that putting certain things into the Bill will raise uncertainties in the minds of charitable organisations, and others, as to whether they will be covered. I am anxious not to put money into lawyers’ pockets, so I am being fairly careful in that respect.

The scope of charities has developed over the centuries to reflect changes in what society has at any one time regarded as worthy of inclusion. Some sorts of endeavour, such as the relief of poverty, have always been seen as charitable, while others, such as the promotion of human rights, have been accepted relatively recently. Clause 2 provides a list of the many forms of charitable endeavour or charitable purposes, at the same time preserving the flexibility to recognise new charitable purposes in order to accommodate future changes in society. The Bill does not take away the charitable status of any purpose that is already charitable. No charity will wake up on the day after the Bill becomes law to find that as a result the purpose for which it exists has ceased to qualify as charitable.

An organisation cannot be a charity unless its purposes are exclusively charitable. That means that its purposes must fall wholly within the purposes listed in the Bill. To qualify as a charity, an organisation must not only have exclusively charitable purposes but be for the public benefit. The Bill preserves the existing law on the definition and test of public benefit, with one change. Under the existing law, there is the presumption that charities established for the relief of poverty, the advancement of education or the
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advancement of religion are for the public benefit. Charities established for all other purposes do not benefit from that presumption. The Bill abolishes that presumption. That will create a level playing field on which all charities will have to show that they are for the public benefit. To do so, an organisation will have to show that it generates identifiable benefits that reach, or are available to, a sufficiently large section of the public. Given the great diversity of charitable endeavour, the nature of those benefits and how they reach the public will vary greatly.

Sir Patrick Cormack (South Staffordshire) (Con): The right hon. Lady will know that the Christian Institute, among other bodies, has expressed concern about the withdrawal of that presumption. It worries, for instance, that missionary activities could be liable to reinterpretation. Can she reassure it, and me, that that will not be the case?

Hilary Armstrong: I can give the hon. Gentleman a clear reassurance that that will not be the case. However, I would like to clarify the position on the charitable status of fee-charging charities.

Bob Spink: I seek further clarification. When a charity registers, it must establish that it is working its activities in the public good. According to the Bill, it must also do so on a continuing basis. How often would that question be raised by the Charity Commission, and how burdensome might that ongoing requirement be for charities?

Hilary Armstrong: That will be for the Charity Commission to determine, but any charity already has to publish annually a report outlining what it is doing. That has to be public and I expect all organisations to take that opportunity to express what they are doing to meet the Bill’s public benefit demands. It will be for the Charity Commission to issue guidance and to pursue the matter that the hon. Gentleman raised.

As I was saying, I would like to clarify the Bill’s position on the charitable status of fee-charging charities.

Mr. Andrew Turner (Isle of Wight) (Con): The Minister mentioned that charities would have to have “identifiable benefits”, so will she explain the identifiable benefits of the advancement of religion?

Hilary Armstrong: The issue is based at the moment on case law. I know that religions could mention some significant aspects of what they do that relate to public benefit, though they may differ from religion to religion. It is nevertheless important for them to be clear, if they are securing taxpayers’ money, that they are accountable. That is the whole purpose of public benefit. If organisations are exempted from paying taxes, they need to be able to demonstrate to the public how it will benefit. It is not identifiable in the sense that I can describe precisely what the benefits should be, but it is identifiable in that it must be clear that activities benefit the public in a way that the public can identify and respond to. The Bill is partly about securing public confidence in charitable status.


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I really must move on now to issues about fee charging. I am aware of considerable discussion among right hon. and hon. Members and the media about that matter, particularly with regard to the independent schools sector. Until now, owing to a presumption built up through case law, independent schools have automatically been granted charitable status if they requested it. Previous legislation, including the Charities Act 1992, did not deal with the problem, but the Bill before Parliament today will abolish the presumption that independent schools can be charitable simply because they provide educational services. For the first time, they will have to demonstrate public benefit in order to gain charitable status. That same principle will apply to all fee-charging charities in whatever sector they operate.

Many organisations—whether they be a hospice, a local museum, an outreach programme or any other organisation that charges a fee but is charitable—provide vital services and are held in great affection by the communities that they serve, and the Bill will require each to be assessed on its own merits and judged accordingly. Several of my hon. Friends have already suggested that they would prefer an amendment to specify more clearly in the Bill what the public benefits should be. I remain to be convinced of the necessity of that and am anxious about the downsides. By trying to be more specific, we do not want to exclude organisations that should not be excluded. I hope that hon. Members, especially my hon. Friends, understand that we are determined that there will be a test of public benefit, which we expect to be meaningful, but that trying to identify matters too clearly frequently brings disbenefits that nobody anticipated.

Martin Horwood (Cheltenham) (LD): The Minister has been clear about some of the organisations that would not be affected by the Bill’s new version of the public benefit rule but will she clarify—for her hon. Friends as well as me—whom she would expect to lose charitable status as a result of the Bill? To be meaningful, the measure must affect somebody when compared with current legislation.

Hilary Armstrong: The measure means that every organisation that seeks charitable status will have to be clear about how it believes that it benefits the public, and the Charity Commission will assess that. The Charity Commission is the regulator, which will produce guidance. It is not its aim to ensure that some people lose charitable status. It will listen to what Parliament is saying, and I believe that Parliament is strongly of the view that it wants the public benefit test to be meaningful. I would expect the Charity Commission to reflect that in its guidance.

Alun Michael (Cardiff, South and Penarth) (Lab/Co-op): I welcome my right hon. Friend’s reference to the engagement of Parliament in the process. She is wise to resist too tight a definition but there is a great deal of knowledge in the House, and if the Charity Commission, in reaching its conclusions—as it must as an independent body—listens to Members of
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Parliament, that is infinitely preferable to a tight hand of legislation or Government. I encourage her to proceed in that way.

Hilary Armstrong: My right hon. Friend understands well how Ministers approach such matters. There are frequently so many different legal interpretations, and we do not want charities to become too engaged in legal cases. Another aspect of the Bill makes it easier for matters to be sorted out through tribunals. They should be sorted out on a case-by-case basis and I believe that the Charity Commission will listen carefully to what we say. I trust that it will be guided by what Parliament says.

Tom Levitt (High Peak) (Lab): My right hon. Friend knows that many independent schools have excellent drama, sporting, field study and other facilities and that, increasingly, state schools throughout the country are entering into partnerships and gaining access to those facilities. Does she believe that those independent schools will be more or less likely to share those facilities if they are forced to lose 4.5 per cent. of their income through the removal of charitable status?

Hilary Armstrong: My hon. Friend makes a good point. We intend to ensure that we get the best educational opportunities for every child in this country. The independent schools, in partnership with the state, can contribute to that aim. I would expect them to do so. I envisage the Charity Commission considering such direct and indirect benefits.

Sir Patrick Cormack: The Minister gave a most helpful answer to my earlier intervention. I accept the point made by the right hon. Member for Cardiff, South and Penarth (Alun Michael). Will the Minister ensure that the Charity Commission’s attention is drawn to what is said not only on the Floor of the House today but in Committee and during remaining stages? It is important that it knows that Parliament is passing it great power, and is not asking it to nit-pick, ride hobby-horses or have agendas, but to consider, in the broadest way, what can deliver benefit and good to the public, and interpret matters accordingly.

Hilary Armstrong: I thank the hon. Gentleman. I hope that I have made it clear to the House that I would encourage the Charity Commission, although I would not want to interfere in its independence, to take note of all our debates on the Floor of the House and in Committee.


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