Mr.
Turner: It is a great pleasure to see you in the
Chair this afternoon, Mrs. Humble. Once again, the sun is shining and
everyone is happy. They will be happier still to know that I shall not
go into great detail about amendments Nos. 112 to 121. I had a word
with the Parliamentary Secretary over lunch and he persuaded me that
the amendment was not necessary because it was not possible to have an
incorporated organisation such as a charitable incorporated
organisation—in deference to the right hon. Member for Cardiff,
South and Penarth—that did not have members. I hope that he will
say a few words in explanation of that position, as a result of which I
shall not press the
amendment.
Edward
Miliband: This is an incredibly complicated issue and
members of the Committee will be pleased to
know that I shall not read out the 20-minute speech that I had prepared
on the subject. Suffice it to say the problem is that, under English
company law, there is not a company that does not consist of members.
Trustees control and manage the charity under a CIO and members
essentially form the charitable incorporated organisation. Although
there is some sympathy with the intention behind the hon.
Gentleman’s amendments, it is difficult—as our discussion
made clear—to achieve what he seeks. There needs to be both
trustees and members, although it is not particularly elegant in law.
In light of the undertakings, I am happy to continue to discuss matters
with him and any other representatives that he considers have important
views on the matter, so I hope that he is willing to withdraw the
amendment.
Peter
Bottomley: I suspect that my hon. Friend the Member for
Isle of Wight (Mr. Turner) is right to have understood whatever was
said outside the
Committee. I want to
raise an issue about the Charity Commission. Let us suppose that an
incorporated charity had trustees with, say, two members and those
members died. Would it be open to the Charity Commission to appoint
people to be members so that the charity could continue or would the
charity be dissolved? Again, the Minister might want to respond to such
a question by correspondence. Such a thing is not likely to happen, but
we always need to know what would happen in those
circumstances.
Edward
Miliband: That is an important question. What happens in
such circumstances would be governed by the constitution of the
charitable incorporated organisation. It would need to appoint new
individuals to the organisation in the usual
way.
Mr.
Turner: I beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. 4.15
pm
Mr.
Turner: I beg to move amendment No. 166, in
schedule 7, page 115, line 5, at
end insert— ‘(7) No person
under the age of 18 years shall be appointed as a charity trustee of a
CIO.’.
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 167, in
schedule 7, page 115, line 10, at
end insert— ‘(ca) that its
assets cannot be distributed to its members in their capacity as
members,
and’. No.
168, in
schedule 7, page 115, line 18, at
end insert— ‘(ba) containing
restrictions on the material benefits that the charity trustees of the
CIO can derive from the CIO,
and’. No.
169, in
schedule 7, page 115, line 35, at
end insert— ‘(7) In
subsection (2)(ba), “material benefits” means benefits
which may or may not be financial, but which have a monetary
value.’.
Mr.
Turner: Those same conversations over lunch revealed that
the proposals in amendments Nos. 167 to 169 are a part of general
charity law that does not need to be repeated. However, amendment No.
166 poses something of a quandary.
As Committee members know from
the previous debate, a charitable incorporated organisation has both
trustees and members, and those members are akin to members of a
company. In company law, a member of a company can be of any age,
although I understand that the Company Law Reform Bill will change the
minimum age for membership of a company from birth to 16. However, the
minimum age at which a person can be a trustee of a trust, let alone a
charitable trust, is 18. Amendment No. 166 proposes that 18 should be
the minimum age for being a trustee of a charitable incorporated
organisation. There is some question about whether that is appropriate,
given that a charitable incorporated organisation is a corporation as
well as a charity. However, I hope that the Minister will take the
issue away and think about it over the recess. Perhaps he will come up
with a proposal on Report that commands general
confidence.
Edward
Miliband: The hon. Gentleman has, conveniently and
usefully, drawn a genuine dilemma to our attention. Since the Bill was
drafted—many moons ago, it seems now—the Company Law
Reform Bill has stipulated that directors of companies can be as young
as 16. However, in charity law, trustees must be 18. That poses a
dilemma for us all. CIOs are charities rooted in some of the benefits
of company law, but their reform lies in charity law. We shall take the
issue away, think about it and report back to hon.
Members. James
Duddridge (Rochford and Southend, East) (Con): As the
Minister knows, I raised in the House the issue of people with learning
disabilities acting as trustees. I should like to link that with what
we are discussing. Is there not a rationale for having different
categories of trustees, and not only allowing people aged 16 to be
trustees but introducing a category between a member and a trustee,
particularly for charities that represent young
people? Helen
Goodman (Bishop Auckland) (Lab)
rose—
Edward
Miliband: I give way to my hon. Friend the Member for
Bishop Auckland (Helen
Goodman).
Helen
Goodman: This issue is highly problematic for charities
working with young people which want young people to have a voice in
how they are run. However, the case in respect of young people is
different from that of people with learning disabilities. It is
possible to insert people in advisory panels and management committees
at a level below that of the trustee board, to avoid giving them the
full legal responsibility of trusteeship. I just offer that
thought.
Edward
Miliband: I am grateful to my hon.
Friend. Mr.
Robert Flello (Stoke-on-Trent, South) (Lab): I ask my hon.
Friend the Parliamentary Secretary to bear in mind that the single
biggest group of people
involved in volunteering activities are aged between 16 and 24. To my
mind, to exclude them seems to move away from natural
justice.
Edward
Miliband: I may cause some alarm among my officials by
saying this, but perhaps my hon. Friends are giving me the idea that we
should strike a blow for 16 to 18-year-olds and move more generally
towards 16-year-olds being eligible to be trustees. I throw that out
not as a proposal, but more as a
thought.
Alun
Michael: The way that my hon. Friend is engaging with the
issue and responding on his feet to hon. Members’ comments is
encouraging. I know from my previous incarnation that one of the
reasons for the age change in the Company Law Reform Bill and accepting
that we should choose the age of 16 was that we wanted to encourage a
spirit enterprise and responsibility among young people. However,
enterprise can be delivered through charitable organisations as well,
and we also want to promote the spirit of charity. Perhaps we might
consider a safeguard that protects the charitable institution but
allows young people a genuine vehicle through which to engage in such
activities. I encourage my hon. Friend to explore
that.
Edward
Miliband: I am grateful to my right hon. Friend for
pointing that out. I warm to the idea the more we discuss
it.
Martin
Horwood: I encourage the Minister to warm to it some more.
I am not sure that many safeguards are needed beyond those that already
exist in the process of becoming a trustee in the first place, either
by election or by peer group acceptance. I encourage him to move from a
thought to a
proposal.
Edward
Miliband: I am grateful for the degree of consensus that
we seem to be developing on the issue. I do not know whether
Conservative Front-Bench Members share that
enthusiasm. I am
advised that young people and others can participate through advisory
councils without becoming legal trustees. Perhaps that answers the
point made by the hon. Member for Rochford and Southend, East (James
Duddridge), but it does not answer the question whether 18 or 16 is the
right age for trustees, and whether there is not a case for bringing
the Bill into line with the precedent set by the Company Law Reform
Bill. As the Committee has developed that thought collectively, I shall
take it away and think about it during the summer. I hope that the hon.
Member for Isle of Wight will withdraw his
amendment.
Mr.
Turner: It is important to place on record that the
Company Law Reform Bill has raised the age at which one can become a
trustee, thereby—to follow the logic of the right hon. Member
for Cardiff, South and Penarth—excluding under-16s from
participation in enterprise rather than enabling those between 16 and
18 to participate. I
suspect that a compromise will be achieved, but I have concerns about
the consequences of such a
compromise on the other responsibilities of people aged 16 to 18. One of
the responsibilities of trustees is personal liability, which might not
be appropriate for those aged 16 to
18. Peter
Bottomley: I had planned to quote from this later on, but
“Responsibilities of charity trustees: a summary”, a
document published by the Charity Commission dated 18 January 2002,
says: “You
cannot be a charity trustee if you are under 18 years of age (unless
the charity is a registered
company)”. It is
therefore possible to be a charity trustee under the age of 18 anyway,
assuming that the Charity Commission’s guidance is
accurate.
Mr.
Turner: That information was not available to me a couple
of minutes ago. In the circumstances, I am grateful to the Minister for
agreeing to consider the subject. I beg to ask leave to withdraw the
amendment.
Amendment, by
leave,
withdrawn.
Mr.
Turner: I beg to move amendment No. 36, in schedule 7,
page 116, leave out inserted section
69D.
The
Chairman: With this it will be convenient to discuss
amendment No. 129, in schedule 7,
page 116, line 18, at end
insert— ‘(7) No CIO shall
describe itself as a charity or its Welsh
equivalent.’.
Mr.
Turner: Amendment No. 129 is unnecessary, so we are making
considerable progress on the schedule, but I think that amendment No.
36 is necessary. Proposed new section 69D of the 1993 Act will create
no fewer than 37 new criminal offences. Subsection (1) will create
eight offences affecting various people,
including “A
charity trustee...or a person on the CIO’s behalf who
issues or authorises the issue of any
document”— tiddley
pom, tiddley pom. There are other measures as well, making eight
offences. We then go on to subsection (2), in which there is the
opportunity for another 28 offences to be created. Subsection (3)
creates one further offence. The commission has the power to warn,
advise or remove anyone who does any of those things anyway.
I was struck by the findings of
the Joint Committee, which states in its report
that: “Considerable
concern was expressed about the possible
imposition” —by
clause 28, although it applies just as well to new section
69D— “of a
criminal penalty on a trustee...Comments varied from
‘unacceptable’ at one end of the scale to
‘draconian’ at the other...Bircham Dyson Bell
considered that criminal sanctions would introduce a further deterrent
to volunteering and make it more difficult to recruit
trustees...The Committee are concerned about a blanket imposition
of a criminal penalty for breach of trust...We conclude that cases
should only be pursued where a trustee acts dishonestly...We
consider that the imposition of a criminal penalty would be
counterproductive and recommend that the Bill should impose a civil
penalty without leaving someone with the stigma of a criminal
conviction.” A
huge number of offences have been created in a huge number of areas in
a vast amount of legislation in
recent years. The Charities Bill should not be another vehicle for the
creation of such offences. I agree with the Joint Committee that people
are put off becoming trustees if they fear that a slip can lead to
criminality or even prosecution. They may succeed in demonstrating that
it was a slip and that they are not guilty, but they face the
heartache, distress and disruption of their lives that results from
facing a potential criminal charge. That is not something that we
should do as lightly as it appears to have been done in the proposed
section. | 
