Edward
Miliband: We have had a most illuminating debate, I think.
The starting point is whether we agree with the overall principle that
all charities, in return for receipt of public money, should have to
show public benefit. The Government and the Liberal Democrat Front
Benchers agree with that principle, but I am sad to say that the
Conservative Front-Bench spokesman does not appear to do
so.
James
Duddridge: On a point of clarification, what exactly does
the Minister mean by receiving public money? Does he mean receiving it
by not being taxed? That is somewhat different—a flow of funds
in the opposite direction. That is
fundamental.
Edward
Miliband: The hon. Gentleman can dance on the head of a
pin if he likes, but there is a significant cost to the public purse as
a result of charities’ preferential tax status. It is clearly a
cost, and in my view such preferential treatment relative to other
organisations must therefore be justified. That is
obvious. Mr.
Robert Flello (Stoke-on-Trent, South) (Lab): On a minor
point, does my hon. Friend agree that the label “charity”
also makes the public more willing to donate money than the label
“not-for-profit organisation”
might?
Edward
Miliband: My hon. Friend makes an important point. Part of
the Bill is about ensuring public confidence in the charitable brand.
We cannot say that the public should have confidence in the charitable
brand if a whole set of classes of charity is presumed not to have to
show public benefit. That is the existing
law. The hon. Member
for Isle of Wight asked about the nature of the test. That will be
determined on the basis of common law, but it is clear that at the
moment, various charities are essentially not scrutinised because of
that presumption. That is how it works in practice. The Government
think that that is wrong. We think that the RSPCA, Eton college and a
religious charity should all provide proof of public
benefit. Angela
Watkinson (Upminster) (Con): The Parliamentary Secretary
might have received correspondence from various religious organisations
on the subject. The Christian Institute expressed concern that the
removal of presumption on the public benefit of religious organisations
will give the
commission “greatly
increased powers to reject the applications of religious bodies or even
to de-register existing
ones”. Will the Minister
reassure the Committee that the stringency of tests will not be greatly
increased?
Edward
Miliband: There is a difference. A test will be applied in
practice that is not currently applied. The hon. Member for Isle of
Wight quoted my point on Second Reading that it is clearly established
in common law that the practice of religion and religious organisations
is seen as providing a benefit to the public. It will be for the
Charity Commission to make the final decision, and I cannot speak for
it. That is a commonly accepted principle. It is clear that religious
charities and organisations provide public benefit, and I see no reason
why that should change. The hon. Lady can therefore reassure religious
organisations.
5
pm
Angela
Watkinson: I am not absolutely certain about the status of
the commission’s position paper, “Public
Benefit—the Charity Commission’s Approach” or
about the relationship between that paper and the Bill. Religious
organisations believe that the commission will distinguish between acts
of worship and services in
a public place and other forms of religious practice
such as, for example, missionary work and the alpha course. Will the
commission distinguish between acts of worship and services and other
forms of religious practice? There is a concern that if public worship
is not included, religious organisations might encounter difficulties
under the Bill.
Edward
Miliband: Reassurance can be offered on the point about
missionary work, which has been raised before.
Let me return to the argument.
There will be a public benefit test for every charity, and that is
right. There is a specific issue about fee-charging charities, because
they have to show that they provide benefit to a sufficient section of
the population, and it will be for the commission to implement the
provision in practice. My concern about the hon. Gentleman’s
amendment is that, essentially, he seeks to provide a free pass to
certain charities. His concern is probably motivated by independent
schools, but the Conservative party is on its own not only in this
Committee but in relation to independent schools. They welcome the Bill
and say that it is the right thing to do.
I have a letter from Jonathan
Shephard, head of the Independent Schools Council, to my right hon.
Friend the Chancellor of the Duchy of Lancaster. It is important for
the Committee to hear it. He says:
“Presumption of public
benefit will be removed. This is of prime importance. Until now, the
presumption has been that a body established for charitable purposes
(including education) is charitable. This is (broadly) irrespective of
performance. Now that the presumption is being removed, there will be
no place for the lazy charity.”
Mr. Shephard goes on to say that in
evidence to the Joint Committee, chaired by my right hon. Friend the
Member for Darlington (Mr. Milburn), he referred to the fact that some
charities needed to pull their socks up. He said that they will now
have to do so, because of the removal of presumption, and the likely
annual audit and return of public benefit that they will be required to
provide. I agree with
Mr. Jonathan Shephard. Many private schools do incredibly good work
with the state sector, but as he said to me, we aspire to ensure that
as many schools as possible rise to the standards of the best in
co-operation with the state sector. We are trying to break down the
divide between private and state schools. That is important, and I
would have thought that the Conservative party would welcome it. The
Bill, by removing the presumption, will help to ensure that it happens.
Mr. Jonathan Shephard of the Independent Schools Council, which
represents the private schools, after all, agrees. He thinks it is a
good idea. In fact, he has said that it is a very good Bill, so I
cannot for the life of me see why the hon. Gentleman is worried. There
will be a test, and the bar will be raised, because the test was not
being implemented in practice before.
Mr.
Turner: The Minister has now said something
illuminating—not that most of what he says is not illuminating.
He says, “because the test was not being applied properly
before”.
Edward
Miliband: I said
“implemented”.
Mr.
Turner: I am sorry. The Minister used similar words. If
that is what he is asserting, we are beginning to understand his point,
but if the test was not being applied properly by the Charity
Commission when it had only to look at cases that were brought to it,
how on earth will it be applied properly to every charity in all three
categories when it has to go systematically through every charity? Is
the Minister saying that it was pure luck that the Charity Commission
found the Finsbury Park mosque, applied the test and found that it
failed?
Edward
Miliband: The hon. Gentleman is bringing up all kinds of
different issues. The Finsbury Park case was not about public benefit
but we should not go down the Finsbury Park road because it will
confuse an already somewhat confused
picture. My point is
simple: at present there is a presumption of public benefit for
educational, religious and anti-poverty charities. As I said on Second
Reading, that presumption has, in effect, meant a free pass for
charities in those categories. There should not be one law for one set
of charities and another law for another set. It is right that every
one should have to pass a public benefit test and that is what will
happen. There is no great revelation in what I have said; it will be
for the Charity Commission to implement that test and we will discuss
in clause 4 how that will be done.
The hon. Member for Upminster
referred to the illustrative material for this Bill that was published
by the Charity Commission. When the Bill is enacted, it will publish
general draft guidance for consultation with stakeholders, individuals
and the public and that is the right way to go. It will then consider
specific groups of charities and it will be for the Charity Commission
and the chief charity commissioner to implement the proposal in
practice, which is right. It is not for politicians to do
so. Several questions
were asked about the precise test of public benefit and they are very
legitimate questions. If my answers have been somewhat inadequate on
the matter of the specific test for individual charities, it is because
there is a body of case law that has been built up over time. On the
advice of the National Council for Voluntary Organisations and other
major charities, we made a decision on public benefit to stick with a
flexible definition that was defined in common law.
That does not
make things simple; it makes them incredibly complicated, especially
for people who are not lawyers. We could have said, “For every
charity and for every possible purpose, we politicians will provide a
public benefit test,” but that would not have been the right way
to proceed. However, the implications are that we have to rely on the
wisdom of the courts and the Charity Commission. When enacted, the Bill
will be implemented on the basis of the established body of
law. The amendment is
misconceived. It troubles me, because it puts the hon. Member for Isle
of Wight and the Conservative party outside the mainstream of opinion
on the matter. I still do not fully understand the motivation behind
the amendment; it is right that all charities should have to pass the
public benefit test and I urge the hon. Gentleman to ask leave to
withdraw the amendment.
Mr.
Turner: I am grateful to the Minister for the way in which
he has responded to the amendment. The motivation is to scrutinise the
consequences of the Bill. I am by nature someone who is concerned when
everyone agrees because it may mean that we have scrutinised the
proposal insufficiently.
I am particularly concerned
about the imposition of an additional responsibility on small
charities. I originally intended to table one amendment that would have
overturned the abolition of the presumption in all three cases. As a
result of what Ministers said on Second Reading, I decided to table two
separate amendments because if the independent schools think that it is
all right, I see little point in arguing on their behalf that it is all
wrong. However, I have certain concerns about the position of Mr.
Jonathan Shephard and the independent schools, to which I shall
return. As my hon.
Friend the Member for Upminster has suggested, I am concerned that the
consequence of the abolition of the public benefit would be onerous and
would establish a higher level of test. The Minister has persuaded me
that it will not establish a higher level of test in the cases of the
abolition of poverty and the advancement of religion.
The reasons why people are
concerned are set out, as my hon. Friend mentioned, quite well in the
Christian Institute paper. It
stated: “’‘Public
Benefit - the Charity Commission’s approach’ is very
secular in tone. It states that that public benefit must be assessed
‘in the light of modern conditions’ and that keeping up
with ‘modern society’ is required if a charity is not to
have its charitable status
revoked.” It was noted
that that is contained in paragraphs 15, 23 and 24 of the Charity
Commission document.
In the nature
of things, some people who are religious think that there is something
wrong in modern society and that not everything is right about it, and
they point out that major religions are not modern and that one cannot
interpret belief in the light of modern society. Plenty of people will
do that, some of whom are in the Episcopal Church in the United States
of America, but others do not, some of whom are in the Anglican Church
in Nigeria. Without going too far down that road, such people are
concerned that they will be told to modernise in order to comply with
the new thinking of the Charity Commission. The Minister has gone some
way towards setting my mind at rest.
Edward
Miliband: The Charity Commission has had a rough time
today. There is no sense in its guidance that modernisation means
somehow abandoning the religious principles that these organisations
rightly want to uphold. In fact, my hon. Friend the Member for High
Peak made the point that, hundreds of years ago, such provisions might
have been applied only to Christian organisations. Now, we are talking
about a wider set of religious purposes. That is what modernisation
surely means in this
context.
Mr.
Turner: We may find that modernisation involves some of
the religions to which the hon. Member for Cheltenham rightly referred
disparagingly, so I hope it does not. I accept what the Minister is
saying, but I hope that he will accept that the reason for scrutinising
these passages with care is because we need to understand the
consequences of invoking them.
I hope the Minister will also
accept that although the cost to the public purse, by his definition,
of the independent schools is about £100 million, they put
considerable additional money back into society in the form of
scholarships and so on. I am sure that he will accept that. Although
the overall cost of charities to the public purse is in excess of
£2.8 billion, there is a value of what charities do in return
for it. Perhaps it is a value that has not been quantified; perhaps it
is impossible to quantify. In talking as I think the hon. Member for
High Peak did about the cost to the public purse of charities, we
should recognise, as I know the Minister does, that there is a benefit
to the public purse of charities as
well. I am not arguing
for a free pass to charitable status for charities; I am arguing that
it is a more efficient way of regulating—it might be more
efficient in the case of all charities, but this is the position we are
discussing—to have a system whereby a charity that fulfils the
basic qualifications can be deemed charitable unless someone says,
“Look here, that organisation is not doing its job
properly” than to have one where charities have go through
certain hoops before they are allowed to become a
charity.
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