Clause
23Participation
of Scottish and Northern Irish charities in common investment schemes
etc.
Edward
Miliband: I beg to move amendment No. 171, in
clause 23, page 24, leave out lines 14 to
17 and insert— ‘(a) a
Scottish recognised body,
or (b) a Northern Ireland
charity,’.
The
Chairman: With this it will be convenient to discuss the
following amendments:
Government amendments Nos. 172
to
174.
Edward
Miliband: Those are purely technical amendments that take
account of a recent change in Scottish charity law and which cover
ourselves for possible future change in Northern Ireland charity law. I
hope that the Committee will be able to change them on that
basis. Amendment
agreed to.
Amendments
made: No. 172, in
clause 23, page 24, leave out lines 32 to
35 and insert— ‘(a) a
Scottish recognised body,
or (b) a Northern Ireland
charity,’. No.
173, in
clause 23, page 24, line 44, at
end insert— ‘(3A) After
section 25
insert— “25A
Meaning of “Scottish recognised body” and
“Northern Ireland charity” in sections 24 and
25 (1) In sections 24 and 25
above “Scottish recognised body” means a
body— (a) established
under the law of Scotland,
or (b) managed or controlled
wholly or mainly in or from
Scotland, to which the
Commissioners for Her Majesty’s Revenue and Customs have given
intimation, which has not subsequently been withdrawn, that relief is
due under section 505 of the Income and Corporation Taxes Act 1988 in
respect of income of the body which is applicable and applied to
charitable purposes only. (2)
In those sections “Northern Ireland charity” means an
institution which is a charity under the law of Northern
Ireland.”’. No.
174, in
clause 23, page 25, line 2, leave
out ‘and 25’ and insert ‘to
25A’.—[Edward
Miliband.] Clause
23, as amended, ordered to stand part of the
Bill. Clauses
24 to 26 ordered to stand part of the
Bill.
Clause
27Restrictions
on
mortgaging
Edward
Miliband: I beg to move amendment No. 55, in
clause 27, page 29, line 17, after
‘(2)’, insert ‘above’. This is a minor
amendment suggested by the parliamentary draftsman to correct a
drafting error.
Amendment agreed
to. Clause 27,
as amended, stand part of the
Bill.
Clause
28Annual
audit or examination of accounts of charities which are not
companies
Helen
Goodman: I beg to move amendment No. 133, in
clause 28, page 29, line 41, leave
out ‘£10,000’ and insert
‘£20,000’.
This is another measure to
reduce the amount of bureaucracy that small or medium sized voluntary
sector organisations have to deal with. The Minister said on Second
Reading that the number of charities that will no longer have to have a
full audit will be reduced by 3,000 by this section of the Bill. Since
an audit costs about £5,000 on average, that will in effect
inject £15 million into the sector. That is a number that we
should be trumpeting from the roof tops.
The clause goes on to suggest
that those charities with an income of between £100,000 and
£10,000 will not need a full audit but an independent
examination. The purpose of the amendment is to raise that limit of
£10,000 to £20,000, which will mean that more
organisations will not require even an independent examination and will
manage without any independent check on their bookkeeping. It is
another simple measure to reduce the amount of bureaucracy faced by
small voluntary sector organisations.
Martin
Horwood: I applaud the intention behind the amendment, but
we have to be careful about always regarding something like an audit as
an imposition on a charity that is not in its interests. As I have
mentioned before, we are talking about a huge number of organisations;
according to the National Council for Voluntary Organisations, 56 per
cent. of the voluntary sector has an annual income of less than
£10,000. We are talking about a huge area of the necessary
regulation of charities. To exempt another large swathe of small
charities might open the door for exactly the kind of difficulties that
we have already discussed.
Edward
Miliband: Does the hon. Gentleman agree that my hon.
Friend has a point about deregulation and that the best way to deal
with it would be a comprehensive review of all the thresholds in the
Bill a year after Royal
Assent?
Martin
Horwood: I am pleased by that intervention by the
Minister. I would say yes and am happy to leave it at that, but to
complete the essential point, it can be in the interests of donors,
charities and the reputation of the charity sector as a whole for
necessary audit and examination of accounts to take place, and that
guards against fraud.
Mr.
Turner: We have heard about the review before, and I think
it is a good thing. Can the hon. Gentleman point out to me the power
that the Minister will have to make decisions as a result of
that?
Martin
Horwood: I think that I am grateful to the hon. Gentleman
for intervening. I cannot, but I will look forward to the
Minister’s explanation of where that might
be.
Mr.
Bone: I should declare an interest as a chartered
accountant. I urge the hon. Lady to press her amendment. We are not
talking about a set of accounts but about having to have them audited.
An audit is frightfully expensive and is a great blow, in percentage
terms, to the
charity. James
Duddridge (Rochford and Southend, East) (Con): I thank my
hon. Friend for giving way. As a chartered
accountant— [Interruption.] I am not a chartered
accountant. Will my hon. Friend, as a chartered accountant, give me a
suggestion of the cost involved? In my experience, well over
£1,000 is common and that would represent a significant
percentage even of £20,000. I support my hon. Friend in asking
the hon. Lady to press the amendment despite reassurances from the
Minister that things will be reviewed a year
later.
Mr.
Bone: That is exactly the point. In many other areas, the
Government have recognised that fact and increased thresholds so that
organisations do not have to have audits. It is an important point and
a good
amendment. Stephen
Williams (Bristol, West) (LD): I am a chartered tax
consultant rather than a chartered accountant. In my experience, lots
of chartered
accountants—I am sure that the hon. Member for Wellingborough
(Mr. Bone) is not an exception—do such audits for charities on a
no-fee basis, as part of building links with the community. Would he
not advocate that his fellow practitioners audit small charities on
that basis? Then there would be no fee and no need to fear the high
charges that he
mentioned.
Mr.
Bone: The hon. Gentleman makes a point, but realistically,
it is an unnecessary imposition on a charity with only £10,000
of income.
Edward
Miliband: This has been a lively debate, with interesting
views from all parties. My hon. Friend the Member for Bishop Auckland
raises an important issue, and the hon. Member for Wellingborough spoke
eloquently as an accountant about the costs that accountants can charge
and the imposition that that might make on small
charities. We need to
examine the measures properly, consulting all charities that might be
affected. The hon. Member for Isle of Wight drew attention earlier to
the relatively small number of responses on another threshold issue. I
reassure him that there are order-making powers in the Bill to vary all
the financial
thresholds. My final
point, partly in answer to the hon. Member for Wellingborough, is that
an examination can be done on charities. It is a lesser scrutiny than
an audit and is done by someone competent but not professionally
qualified, and an independent person must be involved.
The issue raises important
points, but the hon. Member for Cheltenham cautions us against leaping
too quickly into the dark. A thorough review is the right way to go. I
hope that my hon. Friend will withdraw her
amendment.
Helen
Goodman: I am grateful to the Minister. One of the nice
things about the Bill is that because he has only just arrived and is
not really responsible for it, we can be critical of it. Given that
everybody keeps saying how much consideration has gone into the Bill, I
think that the threshold should have been considered before. It is most
unfortunate that thresholds will be established this year when there is
going to be a review and everyone will have to find out what the new
thresholds are in a year’s time. Despite that and
notwithstanding the blandishments of Opposition Members, I beg to ask
leave to withdraw the amendment.
Amendment, by leave,
withdrawn. Clause
28 ordered to stand part of the
Bill. Clauses
29 and 30 ordered to stand part of the
Bill. Schedule
6Group
accounts
Edward
Miliband: I beg to move amendment No. 58, in schedule 6,
page 110, line 19, leave out
‘company’ and insert ‘charity’. Again, the
amendment simply corrects a drafting
error. Amendment
agreed
to. Schedule 6,
as amended, agreed
to. Clauses 31
to 33 ordered to stand part of the
Bill. Clause
34Charitable
incorporated
organisations Question
proposed, That the clause stand part of the
Bill.
Alun
Michael: I apologise for intervening at this stage, but I
have a deep reservation about accepting schedule
7.
The
Chairman: Order. We are at clause
34.
Martin
Horwood: On a point of order, Mr. Gale. Clause 34 refers
to schedule
7.
The
Chairman: We have not reached schedule
7.
Alun
Michael: The clause
says: “Schedule
7, which makes provision about charitable incorporated organisations,
has effect.” My
reservation, which I hope the Minister will agree to consider by
Report, is that the schedule incorporates a pointless acronym into
law. It being One
o’clock, The Chairman adjourned
the Committee without Question put, pursuant to the Standing
Order. Adjourned
till this day at Four
o'clock.
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