Martin
Horwood: I beg to move amendmentNo. 104, in
schedule 8, page 149, line 14, after
‘manager’, insert
‘(who will otherwise be known as an interim
trustee as
appropriate)’.
The
Chairman: With this it will be convenient to discuss the
following: Amendment No. 106, in schedule 8, page 149,
line 14, after ‘manager’, insert ‘or
interim trustee as
appropriate’. Amendment
No. 107, in schedule 8, page 150, line 6, after
‘manager’, insert ‘or interim trustee as
appropriate’. Amendment
No. 108, in schedule 8, page 150, line 11, after second
‘manager’, insert ‘or interim trustee as
appropriate’. Amendment
No. 109, in schedule 8, page 150, line 13, after
‘manager’, insert ‘or interim trustee as
appropriate’. Amendment
No. 110, in schedule 8, page 150, line 15, after second
‘manager’, insert ‘or interim trustee as
appropriate’. Amendment
No. 111, in schedule 8, page 150, line 19, after second
‘manager’, insert ‘or interim trustee as
appropriate’. New
clause 3—Reasons for appointing an interim manager of a
charity— ‘In section 19
of the 1993 Act, after subsection (1),
insert— “(1A)
Within seven days of an appointment under subsection (1), the
Commission must communicate in writing
to— (a) the persons who
are or claim to be the charity trustees of the institution concerned;
and (b) (if a body corporate)
the institution which is the subject of such an
appointment; the reasons why
they consider such an appointment necessary and
appropriate.”’. New
clause 4—Remuneration of an interim manager of a
charity— ‘In section 19
of the 1993 Act— (a) in
subsection (5) leave out “the charity concerned” and
insert “the
commission”; (b) in
subsection (6) leave out “out of the income from the charities
concerned” and insert “by the
commission”.’.
New clause 5—Amendment
of section 19 of the 1993
Act— ‘Section 19 of the
1993 Act in subsection (3) is amended by inserting after “as
they think fit”, the words “, who may, where appropriate
to the size of the charity and expertise required by the charity, act
in a voluntary
capacity.”’. New
clause 9—Appointment and payment of the Receiver and
Manager— ‘(1) In section
19(1) of the Charities Act 1993, at end insert “subject to a
public tender exercise conducted in line with best practice from the
Office of Government
Commerce.” (2) In
section 19(6)(b) of the Charities Act 1993 (c. 10), after “the
income of the charities concerned”, insert “subject to a
public tender exercise and up to a sum agreed in such an exercise, any
additional costs to be met by the
Commission.”’.
Martin
Horwood: Amendment No. 104 is extremely important. It
deals with an issue about which much concern has been expressed by
certain charities: the title of receiver and manager that is used when
the Charity Commission steps in and changes a charity’s
administration. Receivers
and managers have a very wide remit, and the proposed title of interim
manager is a misleading one. Only a small proportion of receivers and
managers who have been appointed have had the kind of narrow remit to
which the term “interim manager” might be appropriate.
Using the Freedom of Information Act 2000, the Association for
Charities has obtained details of 51 receiver and manager appointments
between 1993 and the end of June 2005. The vast majority of those
appointments excluded trustees: in effect, the existing trustees were
taken out of the charity’s administration and the temporary
receiver and manager was inserted. To all intents and purposes that is
an interim trustee appointment.
The importance of the
phraseology is twofold. First, it makes the real status of such persons
clear, and removes the confusion that has undoubtedly existed in the
past, sometimes among trustees and former trustees of the charity and
sometimes even among the receivers and managers, if the evidence from
the Association for Charities be believed. The association has even
cited evidence of confusion among commission staff. Secondly, and
perhaps more important, is the message that is sent to people who
support the charity. In any circumstances, beneficiaries’
interests are best served by an organisation that is properly
administered, either by the original trustees or by an interim receiver
and manager, and that can carry on its legitimate charitable activities
with the maximum possible funding. That depends absolutely on public
confidence and often depends also on continuing public donations. If
the public are told that a receiver, or even an interim manager, has
been appointed, a confusing signal is sent that might cast doubt over
whether the charity is in crisis, and that doubt might deter them from
donating. The term “interim trustee” is much less
value-laden and much less
threatening.
Peter
Bottomley: Many members of the Committee have had the
chance to read the schedule produced by the Association for Charities,
but will the hon. Gentleman tell us for how long, on average, such
people remain in post? Will he confirm whether any of them were
appointed because there was not a crisis?
Martin
Horwood: I cannot answer the hon. Gentleman’s first
question. I am sure that most receivers and managers were appointed
because of real concerns, and even the Association for Charities
document cites cases that I would describe as being arguable either
way. In some cases, there are legitimate arguments for the commission
having to intervene. However, that does not mean that it is right
unnecessarily to damage public confidence in a charity, especially
since, if the commission is really worried about how it is being
administered, the very act of appointing a receiver and manager is done
with the intention of bringing the charity back into line. The idea is
that it will then be properly administered and that the receiver and
manger will continue to administer it in the best way
possible. 1.45
pm James
Duddridge (Rochford and Southend, East) (Con): The hon.
Gentleman is eloquently making the case for the title of
“interim trustee”. However, I am worried that the use of
“trustee” might confer additional legal responsibilities
for the organisation that people would not be willing to accept,
especially financial responsibilities. While it sets the right tone, is
there not a tight legal definition of a trustee? It would cause
confusion.
Martin
Horwood: That is a valid point, but if the existing
trustees have been displaced and excluded, which is what has happened
in the majority of cases, the person appointed to be the receiver and
manager, interim manager, or interim trustee—whatever we call
him—might be taking on the legal responsibilities of trusteeship
and certainly the responsibility to comply with charity law that
applies to the trustees who have been excluded. I cannot see who else
would take on that responsibility in such
circumstances.
Mr.
Turner: The hon. Gentleman seems to be asserting, as I
believe the Association for Charities does, that we cannot have a
charity without trustees and that the most senior person who appears to
be administering the charity becomes the trustee, whether they want to
or not, for the charity’s purposes and its resources. Therefore,
an interim whatever is a trustee in law even if he did not intend to
be.
Martin
Horwood: The hon. Gentleman may well be right, although I
am not necessarily asserting that the individual becomes a trustee. My
legal qualifications are not such that I could say whether the person
would become a trustee in law, but in that appointment he would
certainly seem to carry the responsibilities of a trustee and, thus, be
acting as if he were a trustee. That is why the amendment is sensible.
It would protect the interests of beneficiaries by maintaining public
confidence in the charity and stop the confusion and dispute over the
role of receivers and managers that has been present in the
past.
Mr.
Turner: I am pleased to support the amendment. The role of
the proposed interim manager, who has hitherto been called the receiver
and manager, needs to be bottomed out and made more clear in respect of
when the trustees are removed or when that individual has power to
override them. That is clearly the purpose of such an appointment. To
be neutral for a moment, if a chief executive is appointed to a charity
and that person either has the practical power to override the trustees
or the commission removes the trustees and leaves a gap before
appointing new trustees, someone must have legal responsibility for the
trust. Whether or not my assertion is correct that that person takes on
that responsibility under law, he does so in practice. That cannot be
gainsaid. It seems absolutely correct that we should make it clear that
that person is an interim trustee or perhaps even the interim
trustee. I am worried
about the practice of the appointment of interim mangers and trustees.
Before I speak to the new clauses, I should say that amendments Nos.
106 to 111 are merely consequential on amendment No. 104. I am anxious
about three aspects of the appointment of trustees or interim managers,
each of which is neatly covered by my new clauses.
First, the charity trustees or
corporation—if the charity is incorporated—must be
notified in good time of the reasons for the appointment, otherwise it
will be impossible for them to appeal against it. Apart from anything
else, that is good practice, common sense and a courtesy. Furthermore,
they will be unable take advantage of the tribunal if they do not know
the reasons for the appointment. I suspect that unless that requirement
to notify is placed in the Bill, or the commission makes an undertaking
that it will always do so, there will be lots of appeals to the
tribunal.
Edward
Miliband: I am the bearer of good news. That has been
placed in Bill following a debate in another place. Paragraph 108 of
schedule 8 inserts a new section into the Charities Act 1993 to achieve
precisely that
purpose.
Mr.
Turner: The sun has indeed got his hat on—hip, hip
hooray. New clause 4
deals with my second concern—the remuneration of trustees. My
hon. Friend the Member for Worthing, West referred to appendix 2, which
I think was circulated to all members of the Committee. It is headed
“appendix 2”, but I am not clear on what it is an
appendix to. However, it is the outcome of a list of appointments of
receivers and managers over the period from 1993 to 2004. It runs to
seven or eight pages and covers the appointment of 51 receivers and
managers. The problem
is that such people have to be paid. A bigger problem is that they can
be paid, and usually are, by the charity on the orders of the
commission under the 1992 Act. When I list the first page of the
companies that furnish those trustees, hon. Members will be able to
imagine the sort of the sums that we are talking about. The list reads
as follows: Coopers and Lybrand, Coopers and Lybrand, Arthur Andersen,
Arthur Andersen, Coopers and Lybrand, KPMG—then there is one
that I have never heard of—BDO Stoy Hayward and Coopers and
Lybrand. That is just the first page. Those are big companies that cost
a huge amount to retain, as the Government know because they do it all
the time. When such companies are appointed to run small
charities—or indeed large ones—they inevitably rack up
huge bills.
Sadly, the freedom of information
search found only about seven or eight examples in which the commission
retained sufficient information to tell the researcher how much it had
spent on the 51 receivers and managers. In one case the figure was
£129,000 for six months, in another £87,000 for nine
months, in another £393,000 for four months’
work—these are KPMG rates—and in a further case the
figure was £72,000 for five months’ work. All those sums
were paid for by the
charity. I accept that
we cannot measure the work of a big company such as KPMG solely by the
time that elapses between its appointment and its discharge. I am sure
that in many cases such companies do not do much for part of the time
and that they do not charge for those periods. However, those are huge
sums to charge small charities. I am concerned to read that in at least
one case—the Little Gidding Trust case—the commission
refused to appoint a receiver and manager whenthe trustees
requested that it do so, because the commission believed that the
charity did not have liquid funds with which to pay the receiver and
manager. That is not the Charity Commission working in the best
interests of the charity. I propose therefore in new clause
4—this is fundamental—that the commission and not the
charity should meet the regulatory cost.
New clause 5 emphasises that. I
cannot see a single person in the list of 51 who is a volunteer. I
shall let other Committee members into a secret, Mr. Gale,
of which you might be aware: for many years, whenever there was a row
in a Conservative association, the professional staff in the
Conservative central office had to spend hours trying to sort it out.
[Interruption.] Of course there were lots of rows, as I am sure
there are in other parties as well. Recently, that has been changed.
Professional staff in central office now spend their time campaigning
or assisting people in campaigning—in some cases, not as
effectively as we might like, but never mind; that also is true for all
parties—while the senior volunteers spend their time trying to
sort out the rows. I see no reason why the commission should be wedded
to appointing hugely expensive international firms of consultants, for
that is what they
are. Helen
Goodman (Bishop Auckland) (Lab) indicated
assent.
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