Mr.
Turner: Does the hon. Gentleman agree that although the
percentage of inquiries affecting charities with income of less than
£10,000 is 13.2 per cent., the income of such charities accounts
for only 0.8 per cent
of the gross income of charities? We need a sense of proportion. I fear
that the Charity Commission, and charities themselves, are spending
money haring after the possibility that some of that 0.8 per cent. of
income is ill used, despite the fact that smaller charities spend far
less on administration and fundraising than the larger charities do.
The larger charities are probably wasting money but doing so in a
reputable way, whereas the smaller charities, although they may from
time to time lose money, lose a great deal less of
it.
Martin
Horwood: I think that what the hon. Gentleman is talking
about is simply a function of the fact that the largest organisations
generate a much higher percentage of the sector’s entire income.
Two thirds of the sector’s total income is, I believe, generated
by approximately 3,200 organisations, which constitute just 2 per cent.
of the sector. The statistics can be worked any way, but even in
charities that account for only a small percentage of the income, a
well publicised scandal can damage confidence in the whole sector. That
does no good to small or large charities. I am therefore content for
amendment No. 21 to fall, and for the registration amount to remain at
£5,000 for the time being.
I have no strong views on
amendments Nos. 161 or 162. It seems desirable for the Secretary of
State to have more flexibility on the time scale in which to raise or
lower the
threshold. I
am puzzled by amendment No. 163. The general tone of the contributions
made by the hon. Member for Isle of Wight is of wanting to avoid red
tape, yet despite exempt charities having regulators and being
scrutinised, the amendment would make them subject to extra regulation
just for the hell of it. They would have to supply their details to the
Charity Commission for inclusion on the register and give the name of
the principal regulator. I therefore oppose that amendment.
Edward
Miliband: I shall start with amendments Nos. 160 and 163,
which were tabled by the hon. Member for Isle of Wight. I accept the
point made by the hon. Member for Cheltenham that the regulatory burden
of charities should not be increased, and that is why I cannot accept
the amendment. I am sympathetic to the idea of listing exempt charities
that are regulated for charity law purposes by a principal regulator
other than the Charity Commission, if it is possible to do that
non-bureaucratically. It would be even better if there could be a
comprehensive list that included those charities, perhaps with a little
“e” next to them to denote that they were exempt. I do
not know if that is possible, but I shall consider it and talk to the
Charity Commission about it. The powers of investigation of the hon.
Member for Isle of Wight are impressive, but it should be possible to
see a list of exempt charities. I shall revisit that point on Report. I
hope that that satisfies the Committee.
Amendments Nos. 161, 21 and 162
also deal with the threshold. We are sympathetic to the hon.
Gentleman’s deregulatory aims and have said that there will be a
review of all thresholds within a year of the legislation receiving
Royal Assent. The Committee might like to know that, after the Bill is
enacted, there will be a
number of thresholds in charity law—£5,000,
£10,000, £90,000, £100,000 and
£500,000—that will have different requirements. We want
to have a comprehensive look at such
matters. I take the
hon. Gentleman’s point that, although there has been
consultation on the Bill as a whole, it was not focused specifically on
registration so we should consult on such issues and take into account
the balance. The hon. Gentleman is right. We can think of a charity
with, say, £160,000-worth of capital that might have a 5 per
cent. return—£8,000 of income—but it is not clear
to me that that charity should be outwith the requirement to register.
We shall consult about matters within a year of Royal Assent and I hope
that my reassurance has satisfied him in respect of amendment Nos. 161,
21 and 162. On
amendment No. 90, unbeknownst to him, the hon. Member for Cheltenham,
has discovered a flaw in the legislation. It suggests that we may only
vary the thresholds after a report has been submitted on the operation
of the Act. We have made a commitment to submit that report within five
years of Royal Assent, so that provision will get in the way of our
ambition to have a review a year after Royal Assent. Thanks to the hon.
Gentleman, we shall be coming back on Report to make good the flaw in
the Bill. I am not sure that we agree with him about the resolution
procedures, but we shall investigate that as part of the wider
subject. I come now to
amendment No. 91 and gross income. It is important to realise that
subsection (10)(a) clearly states that a reference to a
charity’s gross income shall be construed, in relation to a
particular time “as a
reference to the charity’s gross income in its financial year
immediately preceding that
time”. That will clearly
be the presumption of the Charity Commission. The only purpose of
subsection (10)(b) is to deal with those circumstances in which a
charity has just been set up and we would not want it not to have the
obligation to register for the whole year during its first year of
operation. The provision allows the Charity Commission to say that, on
the basis of the charity’s expected gross income, it will be
subject to a requirement to register. Similarly, if a charity faces
difficult times and its income has dropped precipitously to below the
threshold, it will be removed from the requirement to register on the
basis of its expected gross income. I hope that that explanation has
satisfied the hon.
Gentleman.
Martin
Horwood: It does not entirely satisfy me. If that is the
purpose behind the clause, perhaps it should say so. The clause gives a
much broader power than
that.
Edward
Miliband: I can honestly assure the hon. Gentleman that
the Charity Commission will not ask the 190,000 charities in Great
Britain, “What is your expected gross income? Is it different
from the income in the previous financial year?” The clause will
cater for such circumstances. I hope that he will accept my assurances
in a charitable spirit and not press the amendment to a
Division.
Mr.
Turner: I am grateful for the Minister’s assurances
on amendment No. 160 and grateful on
behalf of the hon. Member for Cheltenham for his comments on amendment
No. 90. I beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Clause
9 ordered to stand part of the
Bill. Clause
10Interim
changes in threshold for registration of small
charities Question
proposed, That the clause stand part of the
Bill.
Mr.
Turner: I wish to probe a little further. The clause seems
to say that, if for whatever reason we do not introduce clause 9, we
can take advantage of some of its benefits by replacing what is in the
Charities Act 1993 about the thresholds for charities that
have neither permanent endowment nor the use or occupation of any land
under section 3(5)(c) or section 3(12) of the Act. I am not sure if the
Parliamentary Secretary is saying that there will be
delays.
Edward
Miliband: There is a simple explanation. We have given a
promise, to excepted charities in particular, that clause 9 will not be
fully implemented before October 2007. However, we want to have the
power to raise from £1,000 to £5,000 the general
threshold for the requirement to register before that point. That is
the reason why clause 10 will, in essence, explode once clause 9 is
implemented. That will not be before October 2007 because that is the
promise that has been made to the excepted
charities.
Mr.
Turner: I am grateful to the Minister for that
explanation. As all explanations do, it generates a few more questions.
Am I correct in understanding that the Minister does not intend to
implement proposed new sections 3, 3A and 3B of the 1993 Act and
therefore that the changes to excepted charities—or indeed to
exempt charities—will not take place until October 2007 but that
he does intend to raise the threshold for small charities? Therefore,
some charities will be affected because they will be excepted. Is that
what he is saying? May I invite the Minister to intervene? If he does
not want to intervene, I will keep
going.
Edward
Miliband: The hon. Gentleman is correct. The provisions
relating to excepted and exempt charities will not come into force
before October 2007. Since the charities are excepted up to that point,
they will not be affected by the increase in the general threshold from
£1,000 to £5,000 which will take place before that date.
That is simply to allow us to implement the new regulatory ambitions
that we all share sooner than October
2007.
Mr.
Turner: I am content with that
explanation. Question
put and agreed
to. Clause 10
ordered to stand part of the Bill.
Clause
11Changes
in exempt
charities Martin
Horwood (Cheltenham) (LD): I beg to move amendment No. 94,
in
clause 11, page 15, line 8, leave
out from ‘omit’ to end and insert
‘from “of” to end of paragraph and insert
“England and
Wales”.’.
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 165, in
clause 11, page 15, leave out lines 16 and
17. No. 95, in
clause 11, page 15, line 17, at
end insert— ‘(7B) After
paragraph (b)
insert— “(c) any
church, religious congregation, institution, or group of institutions
which Her Majesty declares by Order in Council to be an exempt charity
for the purposes of this
Act.”’. No.
96, in
clause 11, page 15, line 21, leave
out ‘National Lottery Charities Board’ and insert
‘Big Lottery
Fund’. No. 97,
in
clause 11, page 15, line 31, at
end insert— ‘(10A) In
paragraphs (c) and (x) no recommendation to make legislation is to be
made to Her Majesty in Council unless a draft of the instrument has
been laid before, and approved by resolution of, each House of
Parliament.’.
Martin
Horwood: I am afraid that I have left my copy of the 1993
Act elsewhere, so hon. Members will have to bear with me. Amendment No.
94 is intended to tidy up the messy area of exempt charities—a
matter that I and many in the sector had hoped would be addressed by
the Bill. There are historical anomalies in the list of exempt and
non-exempt charities in the 1993 Act, such as the references to
Winchester and Eton, Oxford, Cambridge, Durham and Queen Mary and
Westfield colleges. Those references are now out of time. It is logical
to replace the specific references with a reference to the universities
and colleges of “England and Wales”, as the amendment
proposes. That would lend complete consistency to the matter of whether
universities are exempt charities.
Amendment No.
95 would extend, on a fair and equitable basis, the special treatment
of the Church Commissioners and institutions administered by them. It
would provide the opportunity for the Privy Council to make an exempt
charity of any Church, religious congregation or institution or group
of institutions through an Order in Council. That may have useful
benefits for the non-established Churches—the Church in Wales
may fall into that category—in respect of which the Bill appears
to impose a registration requirement on far more organisations and
congregations at local level than is the case for the Church of
England. Again, there is a need for consistency and equity, which the
amendment seeks to
address. Amendment No.
96 relates to the rather strange clause 11(9), which omits the National
Lottery Charities Board without replacing it with its successor
organisation. I am not clear why the Big Lottery Fund, the successor
organisation, should not be treated in the same way as the National
Lottery Charities Board was. I am looking forward to hearing the
Minister’s comments on that.
Tom
Levitt (High Peak) (Lab): I believe that the National
Lottery Bill is currently being considered in another place, so the Big
Lottery Fund does not yet exist. The fund only comes into legal
existence when the National Lottery Bill has been
passed.
11
am
Martin
Horwood: The hon. Gentleman may be technically correct,
although that does not stop the Big Lottery Fund from having its own
notepaper and status, nor from issuing grants for several years.
Nevertheless, it seems logical for the two Bills to be consistent.
Without a copy to hand I am not sure whether the National Lottery Bill
amends this Bill or the previous Act, but it seems logical—at
least for this legislation—to refer to the institution that we
know will be set up by the time that this Bill becomes law. If the
lawyers are worried about the anomaly it might be just a question of
getting the Royal Assents in the right order.
Amendment No. 97 is in the
spirit of my earlier amendment and would permit alterations to the
exemption of charities to happen only after the relevant statutory
instrument had been laid before each House, and approved by resolution
of each House. It reflects the importance of exempt status and the
significance of that status for the affected
institutions.
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