Mr.
Turner: I am certainly intrigued. The point made by the
hon. Member for Cheltenham was exactly the same as the one he made
earlier, but it was not the same as the Minister’s point. I
think that the Minister said that if a charity was established for the
relief of poverty among elderly people in Hampshire, the Isle of Wight
and Sussex, it would be fine to transfer the property to a charity
whose purposes were to relieve poverty among elderly people in
Hampshire, Surrey and Kent. The Minister accepts that. If the Minister
now says that the hon. Member for Cheltenham was right and he was
wrong, I shall be prepared to withdraw my
amendment.
Edward
Miliband indicated
dissent.
Mr.
Turner: The Minister is shaking his head, so I do not
think that he is saying
that.
Edward
Miliband: Now I am going to cause confusion by
saying that how the hon. Gentleman just put it is correct. Now that I
think about it, the problem with the example given by the hon. Member
for Cheltenham is that the whole purpose of his first charity was
subsumed in part of the purposes of his second, so it did not accord
with my example. However, the example given by the hon. Member for Isle
of Wight is consistent with
mine.
Mr.
Turner: I am grateful for that. In that case, I am happy
about the elderly people in the Isle of Wight, but under the scenario
that I have sketched out, my hon.
Friends who represent Hampshire—and I have forgotten the name of
the other place—would not be happy because their elderly people
would be deprived of the charity’s benefits.
In my example, the
charity’s purposes are three-fold, that is, it covers Hampshire,
the Isle of Wight and Sussex. Under sub-paragraph (4)(b) any of those
purposes will do—the Isle of Wight is in there, so stuff those
in Hampshire and Sussex. If that is what the Government mean—but
I am prepared to give way to the hon. Member for Cheltenham who has no
interest in
this.
Martin
Horwood: The Minister was correct in pointing out the flaw
in my earlier, perhaps simplistic, example. In the hon.
Gentleman’s example, if the property was in the Isle of Wight
and had been given by the donor for the benefit of the relief of
poverty in the Isle of Wight, it would happily transfer under the
clause and have difficulty transferring if the amendment were
made.
Mr.
Turner: It would, but that does not meet the requirements
set out in sub-paragraph (4)(a), which states that it must
be “expedient in the
interests of furthering the purposes for which the property is
held” to transfer it to
be “any of the purposes” of the transferor
charity. I can only
repeat the example. Let us say that the property is money rather than
real property. It is held for the benefit of pensioners in those three
counties and is transferred to a charity that only has the interests of
pensioners in one of those counties. The Isle of Wight Society for the
Blind is a good example of a charity to which to transfer their
property. The benefit is being reduced by two-thirds—rather more
given the relative populations of the three counties. Two-thirds of the
prospective beneficiaries are cut off from
benefit.
Martin
Horwood: I am sorry to be picky, but surely that would
fail test A, so it would not actually
apply?
Mr.
Turner: I accept that would fail test A. In that case, I
still do not understand why it is possible for there to be one purpose
in common. If the hon. Member for Cheltenham’s thesis is right,
one purpose is okay. However, if the Minister’s thesis is right,
then one purpose is not
okay.
Edward
Miliband: This is a shadows and fog debate. We should step
outside of the ivory tower for one minute. There is a context to the
provision. It is about charities whose gross income in the last
financial year did not exceed £10,000. Transfer requires a
two-thirds vote of the trustees and it has to further the purposes for
which the property is held by the transferor charity.
The hon. Member for
Isle of Wight is incredibly ingenious, as he has proved in this
Committee, and he has managed to think of an example. However, I do not
quite see why anyone would set up a charity for the three purposes that
he described. If they did, why
would they want to “stuff”—as he so eloquently put
it—the people of Hampshire by transferring the money
elsewhere? I am all in
favour of intellectual and abstract debate. However, on this occasion,
I think that the clause is fine. We can trust the trustees of those
small charities to make the right decisions and I suggest that we move
on.
Mr.
Turner: Since I am in a friendly mood and largely trust
the trustees of single charities, I am happy to beg to ask leave to
withdraw the amendment.
Amendment, by leave,
withdrawn. Clause
40 ordered to stand part of the
Bill. 5.30
pm
Clause
41Power
to replace
purposes
Mr.
Turner: I beg to move amendment No. 41,
page 44, line 36, at end
insert— ‘(8A) Where the
rules of the charity provide that its members have the power to vote on
amendments to its
purposes— (a) a period
of notice of 28 days, or the period set out in the rules of the
charity, whichever is greater, shall be given to all members of such a
resolution; and (b) this
section shall be construed as if “members” were
substituted for “charity trustees” in subsections (1) to
(8).’.
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 125, in
clause 42, page 45, line 14, at
end insert
‘or, ‘(c)
relating to the execution of the
trusts,’. No.
42, in
clause 42, page 45, line 20, after
‘body’, insert ‘, of which a
period of notice of 28 days or the period set out in the rules of the
charity whichever is greater has been
given,’. No.
102, in
clause 42, page 45, line 23, leave
out ‘and without any
expression of dissent’
and insert
‘but where consensus has been
reached’. No.
43, in
clause 42, page 45, line 24, at
end insert
‘or (c)
in accordance with the procedures of the charity, whichever is more
onerous.’. No.
126, in
clause 42, page 45, line 35, at
end insert ‘provided that the date specified
in the resolution under subsection (2) cannot be earlier than the date
of that
resolution.’.
Mr.
Turner: Amendments Nos. 41, 42 and 43, taken together,
would mean that the period required for a charity to change its rules
was the period set out in the Bill or the period set out in the rules
of the charity, whichever was the greater. That is for the avoidance of
doubt. Amendment No 126 to clause 42 specifies that that action cannot
be backdated. We will shortly find out whether that is part of general
charity law.
Amendment No. 125 to clause 42
is another of those for which I am indebted to the Charity Law
Association, which tells me that it assumes that the intention behind
clause 42 is to allow unincorporated charities to change anything in
their governing documents other than those things that would affect the
way in which the charity deals with its property. I am told that that
more or less mirrors the power of amendment enjoyed by charitable
companies. The
association welcomes that aim, but does not consider that the current
wording offers such a broad power. It has been suggested that the
wording allows charities to change pretty much anything, because the
word “trusts” is as defined in the Charities Act 1993.
Section 97 of that Act states that
“trusts” in relation to a
charity, means the provisions establishing it as a charity and
regulating its purposes and administration, whether those provisions
take effect by way of trust or
not”. It goes on to say
that the definition is broad enough to cover all aspects of a
charity’s governing document, but that proposed new section 74D
does not apply to all a charity’s trusts.
Subsection 2(a) and (b) of the
proposed section 74D restrict the application of the section in such a
way that it will not apply to administrative provisions that are not
connected either to powers exercisable by the charity’s trustees
or procedures to be followed. For example, it will not allow trustees
to change provisions on the minimum number of trustees. Arguably, it
would not allow them to change provisions about the quorum for trustee
meetings, as it is unclear whether that falls within the term
“procedure”. The provision would add a new subsection
(3), applying to all provisions relating to the execution of the
trusts. This is sufficient to widen the power to cover areas missed by
the existing wording without enabling trustees to make changes to the
way the charity can use its property.
Martin
Horwood: Amendment No. 102 would amend proposed new
section 74D(4)(b) of the 1993 Act. At present, the new subsection (4)
provides that
“Any resolution of the
charity trustees under subsection (2) must be approved by a further
resolution which is passed at a general meeting of the body...by a
decision taken without a vote and without any expression of
dissent.” That is an
unusually high test of consent. A number of examples spring to mind
when that might be difficult to achieve. A Quaker meeting is an obvious
one. Another is when there has been debate and discussion, and dissent,
but a consensus is reached with the resolution not being put to a vote.
In that context, I shall not press the amendment to a Division, thereby
illustrating that it is possible to have debate and dissent but to
achieve a resolution that is perfectly satisfactory to all concerned.
It seems like a sensible, almost drafting amendment that would remove a
strangely strict test of consent from subsection
(4)(b). I should be
interested to hear the Parliamentary Secretary’s response to
many of the amendments tabled by the hon. Member for Isle of Wight. I
am sympathetic to amendment No. 41 because the trustees of a charity
have a drastic power. We are discussing a charity that holds no
designated land. It is neither a company nor an incorporated body and
its gross income in its past financial year was less than
£10,000. In effect, therefore, the charity trustees may resolve
to
replace any or all of the purposes of the charity with other purposes.
That is a drastic step and, even for a small charity, it is important
for safeguards to be in place. Amendment No. 41 would provide a
safeguard for the notification of members within the minimum period of
28 days. That is sensible and it would make a good improvement to the
clause. Amendment No.
125 would add the execution of the trusts to the modifiable powers of
an unincorporated charity. I shall not pass judgment on that, but will
await the Parliamentary Secretary’s remarks with interest.
Amendment No. 42 also seems sensible. It would ensure that all members
have been notified of the meeting at least 28 days in advance. It is
consistent with the other amendments. I also support
it.
Peter
Bottomley: The Minister will note that, under amendment
No. 42 to which the hon. Gentleman just referred, mention is again made
of the word “body”. I should be glad to receive a
response about
that.
Edward
Miliband: Let me start by answering the question about the
word “body”. A “body” is distinct from a
person and could either be a corporate body or an unincorporated
body.
Peter
Bottomley: Will the Minister care at some stage to share
with us how it differs from
institution?
Edward
Miliband: I will definitely at a later
date. Let me turn now
to the amendments, starting with Nos. 41, 42 and 102. Amendment No. 41
tabled by the hon. Member for Isle of Wight would place a decision
about replacing any of the charities’ purposes on the membership
of the charity, if it were a charity with membership. I am not sure
that that is necessary. In fact, it is not. The duty of the charity and
the responsibility for its administration rests with the trustees. It
should be their decision and, at least, two thirds of the trustees must
vote for a resolution. Secondly, the trustees must satisfy themselves
that it is in the interests of the charity to proceed with such a
resolution. In any case, the two-thirds majority reflects the 1993 Act.
I do not believe that it is for us in the House to say to charities
throughout the country that are, at present, governed by their trustees
that it is now for members to make the decision. That would be a
substantial change. It would be an imposition from the House on those
charities, whatever the nature of their procedures, that the membership
should
decide.
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