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The new beefed-up Charity Commission will not be accountable to Ministers. I accept that it must be
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independent of Government, but our suggestion of making it accountable to a Select Committee is very sensible. I hope that the Minister will consider it carefully. All Members of Parliament inform themselves about the quality of charitable activity in their constituencies— we are experts in that—so it is a sensible suggestion. We are concerned about the current lack of independence and accountability of that organisation.

Thirdly, we have heard much about partnership between the charitable sector and Government. Of course, that can work really well, but over the past few years we have seen that a charitable organisation may have tremendous success, because it performs its functions in its own way, but once it enters into a contract or relationship with the Government it slowly has the life squeezed out of it by red tape and bureaucracy. If that happens, the organisation can cease to be successful because of too much prescription by the Government. I place a marker to warn the voluntary sector and the Government that although we all want such partnerships, they must not lose the very aspects that make the organisations successful in the first place.

Parts of the Bill will increase regulation and parts will reduce it. The Bill was an opportunity to set charities free, but it has not been properly seized. In particular, the £5,000 limit should be increased, and I hope that the Minister will consider that point. We want clarity on the public benefit test, greater accountability for the Charity Commission, and a light-touch, flexible regulatory regime that genuinely empowers, enables and supports the wonderful, unparalleled spirit of charity and compassion of the great British people to arise, shine and be even more productive in the future. We support the Government’s direction of travel, but we will seek to improve the Bill in Committee.

8.4 pm

The Parliamentary Secretary, Cabinet Office (Edward Miliband): It is a great privilege to wind up this debate. It has been an excellent debate with some thoughtful contributions from Members on both sides of the House, and we have seen the House of Commons at its best. A spirit of charity has abounded, not only in the praise for my right hon. Friend and myself from my hon. Friend the Member for Selby (Mr. Grogan), but in the offer by the hon. Member for Sutton Coldfield (Mr. Mitchell) to be the campaign manager for my right hon. Friend the Member for Darlington (Mr. Milburn) in any future election that might take place. The hon. Gentleman promised to do for my right hon. Friend what he did for the right hon. Member for Haltemprice and Howden (David Davis), so I am not sure how the offer will be regarded.

As Members on both sides have said, it is more than 400 years since the 1601 preamble to the Charitable Uses Act. The Bill has been a long time coming, and that creates an added pressure to achieve consensus. Fortunately, the Bill gets it right. That is partly because it has been well prepared, having its origins in the 2002 strategy unit report; well scrutinised, thanks to the work by the Committee chaired by my right hon. Friend the Member for Darlington; and well debated,
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with 60 hours in the other place so far on two separate occasions. I look forward to the further deliberations in Committee.

The central purpose of the Bill is to put in place a framework for charities and their activities that will enable them to realise their potential, encourage a vibrant and diverse sector and sustain high levels of public confidence. The Bill contributes to that through a streamlined system of law for charity organisation and regulation, a new and consistent approach to regulation of fundraising, and a clear definition of charity, with every organisation having to prove public benefit, all underpinned by an effective, modern regulator in the shape of the Charity Commission. I shall deal with the important contributions that have been made to the debate under those four headings.

On the issue of administration and regulation, the Bill takes important steps, not only in the new charitable incorporated organisation, but the raising of the registration threshold from £1,000 to £5,000, the raising of the audit threshold and several other sensible measures. Hon. Members on both sides raised questions of administration and local examples of charities and how they organised themselves. I was especially struck by the contribution from the hon. Member for Rochford and Southend, East (James Duddridge), who talked about people with learning disabilities and their role as trustees. My understanding, and that of the Charity Commission, is that trustee bodies should be diverse and properly reflect the interests of beneficiaries. People with learning disabilities are absolutely able to be trustees of charities and there should be no difficulty for them in being so. If the hon. Gentleman wishes to write to me further on that, I would be happy to respond.

The hon. Member for Sutton Coldfield, as well as making his generous offer to my right hon. Friend the Member for Darlington, raised several important points. He mentioned the status of armed forces charities and I hope that he is pleased that their charitable purpose is confirmed in the Bill. On the specific issue that he raised about the status of those charities, I have to say that it is hard in the circumstances to strike the right balance between the regulation that we need to achieve a level playing field, and the particular demands of certain charities. The position on armed forces charities is the same as for other excepted charities. They will need to fulfil the requirements made of them, but they are already subject to regulation by the Charity Commission. The only new requirement will be to register and even then only if they have an income of more than £100,000. We have said that that figure will not change before we complete the five-year review of the Bill.

Mr. Andrew Mitchell: The new Minister is doing very well, but he says that the issue is where to strike the balance. I hope that he will read the report of the debate in the cold light of day tomorrow and consider whether, in the particular case of armed forces charities, he has got that balance right.

Edward Miliband: I understand the hon. Gentleman’s role in speaking eloquently for those charities, but if we make an exception for them, many others will say that
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we should make an exception for them, too. However, I shall consider the points that he raised.

The second area in which the Bill makes progress is on charity fundraising. Several hon. Members raised that issue, and we see the difficulty in striking the right balance between regulation that is clear and commands public confidence and the avoidance of excessive bureaucracy. The hon. Member for Isle of Wight (Mr. Turner), who speaks for the Conservative party, was concerned that tin-rattling, as he put it, would still be allowed. The hon. Member for Cheltenham (Martin Horwood) defended the position of charity fundraisers, and indeed objected to the term chugging, which my right hon. Friend the Minister for the Cabinet Office used. My hon. Friend the Member for Brighton, Pavilion (David Lepper) who is not in his place— [Interruption.] He is but in a different place. He talked eloquently of concerns about the charity fundraising that takes place in Brighton.

I shall set out for the House how the legislation will work. The current legislation represents a bad combination of bureaucracy and inconsistency. For example, before granting a licence, local authorities are asked to judge whether a charity’s proposals for collections will yield enough in contributions compared with costs. That should be a matter not for local authorities but for charities. Everyone in the House knows that current legislation is implemented inconsistently and does not even apply to new types of fundraising. The Bill contains important steps forward in that area, and I shall briefly clarify the new regime.

Collections in buildings such as churches, village halls, Royal British Legions and shops will not require a licence. Door-to-door collections will require a public collections certificate to prove the authenticity of the collector, and I can reassure my hon. Friend the Member for High Peak (Tom Levitt) that ID cards will continue to be part of that regime. Finally, street collecting will require a public collections certificate and a licence in advance from the local authority for collection on specific occasions.

In answer to my hon. Friend the Member for Brighton, Pavilion, clause 60 sets out the terms on which local authorities will be able to regulate fundraising. There are a number of ways in which they will be able to do that. The key aspect is that they must make a judgment about whether a collection

it takes place, and so on. I hope that that is of some reassurance to my hon. Friend.

Helen Goodman: I must apologise. I was misled about when the winding-up speeches would begin, which is why I should like my hon. Friend the Minister to consider this possibility: to prevent charities incurring a new and large administrative burden, will he consider wrapping up the collection certificate with the registration process?


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Edward Miliband: There is a two-part process: the first will involve the Charity Commission and the public collection certificate, and the second will involve local authorities. It will be for the commission to determine how it works, but I hope, on the basis of my hon. Friend’s intervention, that she will join us in Committee, where we can look forward to talking further about that issue.

The third part of my remarks is about public benefit. Again, we saw the need to strike a balance. My right hon. Friends the Members for Darlington and for Cardiff, South and Penarth (Alun Michael), and my hon. Friends the Members for High Peak and for South Derbyshire (Mr. Todd) all spoke eloquently about that. A number of principles underlie the Government’s approach, and it is important for the House and the wider charities’ world to understand them.

The first principle is that all institutions, including private schools, will have to show that they provide public benefit. I genuinely hope that that does not separate the Opposition and the Government. The hon. Member for Isle of Wight asked a series of questions about religion, poverty and education. In all those cases, it is right that public benefit must be shown, but I reassure him that, at least for religion, the obligation will not be onerous. We have accepted, and I think others have, too, that making provision for people to attend acts of worship is clearly a public benefit. It is clear in case law, and it will remain part of the charity law of this country. Religions have nothing to fear.

The hon. Gentleman also raised the issue of poverty relief, and he challenged us on whether it was possible for a poverty relief trust not to be charitable. It is possible. For example, if we take the case of a trust to benefit a few people in one’s immediate family, one might say that it was set up for the relief of poverty. However, there might be questions about whether it genuinely provided public benefit. That would be a question for the Charity Commission to consider, but even in that case, which looks deserving of charitable status, scrutiny would be right. The first principle, then, is that all institutions must show public benefit.

In line with the view of the National Council for Voluntary Organisations and leading charities, the second principle is that the commission, not the Government, should make the final decisions about charitable status on a case-by-case basis. It will depend on the circumstances of fee-charging institutions.

Our third principle, which relates to the remarks of my right hon. Friend the Member for Darlington, is that we do not believe that indirect benefit—the claim that, for example, private schools save the state money by educating pupils—is enough to justify charitable status. We agree with the Independent Schools Council, which said in its recent briefing to MPs:

I hesitate to get into a discussion of Re:Resch with my hon. Friend the Member for Selby, because it might extend my speech far too much, but if he considers that case, he will see that indirect benefit is not the only point mentioned to justify the charitable status of independent schools. Lord Wilberforce, in his opinion,
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goes on to talk about benefits that can be construed only as direct. For example, he cites

Our fourth principle is that for private schools as a whole, we need to raise the bar with regard to the contribution that they make towards the public benefit, to the extent that it has a positive effect on the overall provision of education in this country. Some private schools are doing important work with the state sector, but many more must do so, too. That is why we will remove the presumption that education automatically confers charitable status.

Specific amendments will be tabled later in the parliamentary process, but let me say one thing to the hon. Member for Cheltenham, the Liberal Democrat spokesman, on the Scottish system. As others have said, devolution is about different nations being able to introduce different provisions, and that is what the Scottish Parliament has done. In practice, both Bills will have similar implications in Scotland and England, and we are not convinced that it would be helpful to amend this Bill on the basis of a Scottish route. That is not simply our view; others agree. I recently had the pleasure of receiving a letter from Lord Phillips of Worth Matravers, who has been mentioned in this debate already. He said of the Scottish provision that

Let me deal with the contribution of my right hon. Friend the Member for Darlington, who chaired the Joint Committee. The whole House owes him great thanks: the Bill is a better Bill for his work. I agree with the tenor of his remarks. Parliamentary scrutiny is designed to ensure that the Bill carries out our intentions on public benefit and we shall want to consider the proposals made by Members and listen to the debate in Committee.

The hon. Member for South-West Devon (Mr. Streeter) asked about the process and timetable for the Charity Commission’s consideration of each charity. When the Bill is established in law, the commission will hold consultations about high-level guidance on public benefit before finalising it. It will then consult on guidance relating to various subsections on fee-charging public institutions, including schools and hospitals, to establish how public benefit applies in those cases. The process will take between 12 to 18 months from the enactment of the legislation.

Finally, I want to deal with the reforms to the Charity Commission—the first such modernisation since 1960. The House should be honest: this is a big challenge for the Charity Commission to rise to being a thoroughly modern regulator on the basis of new legislation. Many Members, including the hon. Member for Cheltenham, my hon. Friend the Member for Hove (Ms Barlow) and my right hon. Friend the Member for Cardiff, South and Penarth raised local issues about the performance of the Charity Commission.

The basis of regulation has changed dramatically since 1960 and the Bill takes account of that in a number of reforms. Most important, it reflects the need for a widely representative board, whose membership will expand from five to nine under the Bill; for proportionate regulation, which the Charity
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Commission has a specific duty to ensure; and for quick and inexpensive means of redress if people are dissatisfied, which the Bill achieves through the provisions for the new charity tribunal. My hon. Friend the Member for Hove gave an important local example, and I hope that the new charity tribunal system will provide quicker redress in cases such as the one she raised. At present, people have to go to the High Court to seek redress from the Charity Commission, which is an expensive and difficult process, so it is no wonder that in the last decade on average less than one case a year has challenged the Charity Commission in the High Court.

Other points were made about the Charity Commission. The hon. Member for Sutton Coldfield asked about independence. The Charity Commission carrying out its functions on behalf of the Crown does not compromise its independence. The Food Standards Agency is regulated in exactly the same way as a non-ministerial Department and since the Joint Committee proceedings we have added a provision of which the hon. Gentleman may not be aware. It states that

precisely to provide reassurance on that point.

The hon. Member for Isle of Wight raised accountability to Parliament. The Charity Commission must submit to Parliament a report on its work once a year. Labour Members are sympathetic to the notion that there needs to be rigorous Select Committee scrutiny of the work of the Charity Commission. The Home Affairs Committee has a lot on its plate.

Stephen Pound (Ealing, North) (Lab): My hon. Friend makes a cogent case that is actually persuading me to support the Government, but will he give some thought to the 1.5 million citizens of the United Kingdom who live in a part of the realm not covered by the Charity Commission? In Northern Ireland, there is no Charity Commission; the commissioners’ writ does not run. I do not expect a response tonight, but will my hon. Friend look at the recent report of the Northern Ireland Affairs Committee, which drew the attention of the House to that anomaly? Will he include that report in the rest of his reading?

Edward Miliband: We are looking at the issue of Northern Ireland and I am grateful to my hon. Friend for his intervention.

In the Standing Committee, we shall no doubt return to other points that were raised. It is important that the Bill is subject to proper scrutiny, as it will be. The Bill tackles long-standing and difficult issues in charity law, such as public benefit, face-to-face fundraising and the modernisation of the Charity Commission. It will help to nurture the dynamism and social conscience of the charitable sector. Four years after the initial report that led to proposals for the measure, it is on its last lap. The Bill deserves support from all sides and I commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time.


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CHARITIES BILL [ LORDS] PROGRAMME

Motion made, and Question put forthwith, pursuant to Standing Order No. 83A(6) (Programme motions),


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