Peter
Bottomley: I know that the Minister’s words are
intended to be helpful. It is clear that there should not be an easy
way for charity trustees to turn their charity into something
non-compliant and non-recognised, otherwise they would be able to just
walk away with the assets. That is easily accepted. I suspect that the
examples that I have in mind would be rare and
difficult to achieve, and I am sure that trustees would in most cases
wish to remain compliant. I am sure that if there were a question mark
over recognition they would do their
best. Let me cite an
odd example, which is not intended to be taken too seriously. The
former Member of Parliament for Cambridge University, Henry Lucas,
established two trusts. One was a hospital for the elderly in
Berkshire, of which I was once a trustee. The other, of which I was not
a trustee, established the Lucasian chair of mathematics in Cambridge,
which has been held by Isaac Barrow and Isaac Newton and is now held by
Stephen Hawking. Were it to be judged that higher mathematics had no
public benefit—this is where the exaggeration comes in—it
would be perfectly possible for the trustees to be told by the Charity
Commission, “You are in danger of ceasing to be recognised so
you should switch to something else such as nursing, so that the
Lucasian chair of mathematics becomes the Lucasian chair of
nursing.” The trustees would respond, “Henry Lucas said
that he wanted mathematics. There is a tradition of mathematics and a
chair of mathematics it should remain.” I know that that is
improbable, but it is the sort of issue that I have in mind. I hope
that the Minister will think about that and accept that there is
something in what I am saying: that there would need to be an
adjudicating authority. It is not easy, but I think that there is a
serious
problem.
The
Chairman: The hon. Gentleman is in danger of winning the
award for the longest intervention in any
Committee.
Edward
Miliband: In the hon. Gentleman’s defence, I think
that he presumed that I had
finished. The hon.
Gentleman’s point is interesting. The answer is that one cannot
possibly imagine the circumstances in which the Charity Commission
would say that an organisation established for a chair of mathematics
should change to a chair of nursing. As earlier discussions showed, the
whole point about cy-près is that if the old purposes are either
not for the public benefit or cannot be carried out, the new purposes
must be as close as possible to the original intent of the gift. I do
not think that anyone can suggest that the gift in that case was
intended for a chair of nursing.
I am happy for that discussion
to continue outside the Committee. Hon. Members must admit that I have
been very flexible so far, but on that matter I am inclined to be
inflexible. The Committee holds the nature of charity law in trust and
I am being invited down a dangerous road whereby an organisation that
did not meet the public benefit test could simply say, “Well, in
that case we will go outside charity law.” I know that that is
not what the hon. Member for Cheltenham was suggesting, but that would
betray the history of the organisation and the nature of charitable
law. So I am going to be intransigent, but as always we shall listen to
representations.
Martin
Horwood: I am disappointed that the Minister is inclined
to move from generosity to intransigence at this stage in the
Committee’s deliberations.
May I offer an alternative
example to the one offered by the hon. Member for Worthing, West? The
Joseph Rowntree trusts were established for a number of purposes, some
of which were specifically charitable and designed to fall within the
charitable remit. However, one of them—I cannot remember which
one because the names are very similar—was designed specifically
to fall outside charity law, yet under the new heads of charity, it
might well qualify as charitable. It is equally possible that under a
different Administration the law will change again, causing it to lose
that charitable status. As we change legislation, it is eminently
possible that organisations that were
charitable—[Interruption.] The Minister is shaking his
head. Perhaps he could explain the error in my
argument.
Edward
Miliband: This will be a legal one-way street. The hon.
Gentleman is right that an organisation that was not set up for
charitable purposes could become charitable if conventions of the time
change. However, once an organisation starts to benefit from charitable
status, it should not be able to take those benefits outside charity
law. That is why it is a one-way
street.
Martin
Horwood: That was not really the point that I was making.
An institution’s charitable status might change, by virtue not
of its changing its activities, but of a change in the law. I was
simply supporting the point made by the hon. Member for Worthing,
West. The Minister was
right in describing the ideal process, which is that the loss of
charitable status should be the last resort and that everything should
be done by the Charity Commission to avoid that happening. It would
require a succession of intransigent trustees to make it happen.
However, it will be possible, as it is now, to lose charitable status.
As we change the basis of charitable status, that is slightly more
possible than it has been in the
past. 3
pm The question is
what happens to the assets of the charity in that event. The Minister
talked about assets falling outside charity law. My new clause does not
address that. It specifically states
that “the
assets...must be deployed or protected for the charitable purpose
for which they were originally
constituted”, so I am
addressing what happens to charitable assets that must still be applied
for charitable purposes. I have tried to frame a new clause that would
explicitly direct those responsible away from the cy-près route
towards the reconstitution of the charitable institution or the
charitable purposes as originally
constituted. The hon.
Member for Worthing, West has identified a parallel and equal problem
with assets that might have been given first for the purpose of the
institution and only secondly as charitable assets and therefore might
well be considered not charitable under a change in the law. There is
also a lack of clarity about what might happen to those assets, as the
Minister, too, has
shown.
Peter
Bottomley: First, just to fill a gap, I should say that it
was the Joseph Rowntree Reform Trust that the hon. Gentleman referred
to. Secondly, does he believe
that the Minister should reflect on the fact that it would be open to
the Government to change the law, whether through Parliament or under
one of the provisions that we discussed earlier, so that various bodies
that were not charities—this is a separate point from the one
that I made before—could have charitable status? There would be
a responsibility on the trustees to apply for it and then, if the
Government changed the law again or the Charity Commission changed the
way in which it thought of things, they would be caught and
stuck.
Martin
Horwood: The hon. Gentleman makes more elegantly the point
that I was struggling to make that charitable status can change and
what happens to assets in the event of loss of charitable status is a
serious issue. The hon. Gentleman and the Minister have pointed out
technical problems with the drafting of my new clause, so I am content
to withdraw the motion, but I hope that the debate has shown that there
is a serious issue that the Minister might care to reflect on further.
I beg to ask leave to withdraw the
motion. Motion and
clause, by leave,
withdrawn.
The
Chairman: Order. Given that the Committee is making
admirable progress, this is an appropriate moment to remind the
Committee that in its programme motion of Tuesday 4 July it said that
the proceedings shall, so far as not previously concluded, be brought
to a conclusion at 4 pm on Thursday 13 July. I am trying to hold the
Committee to its own admonition. That will be achieved only if speeches
are relatively
brief.
New
Clause
8The
Charity Independent Complaints
Reviewer ‘After section 2D of
the 1993 Act (inserted by section 8 of this Act)
insert— “Part
1B THE CHARITY INDEPENDENT
COMPLAINTS REVIEWER 2E The
Charity Independent Complaints
Reviewer (1) There shall be a
complaints reviewer to be known as the Charity Independent Complaints
Reviewer (in this Act referred to as “the
Reviewer”). (2) The
function of the Reviewer will be to investigate complaints against the
Charity Commission’s performance of its regulatory role and,
where appropriate, make financial awards of compensation against the
Charity Commission, whether limited consolatory payments or unlimited
payments for financial loss, and make
recommendations. (3) Except
where the Reviewer finds the complainant has acted frivolously,
vexatiously or unreasonably, the complainant shall not be required to
pay any part of the costs of the
investigation. (4) No
complainant shall be required to use any internal complaints procedure
of the Charity Commission, the Parliamentary Commissioner for
Administration, the Charity Tribunal or the courts before the Reviewer
will consider the case, and any consideration by the Reviewer will not
prevent the case subsequently being considered by the Parliamentary
Commissioner for Administration or the
courts. (5) The Reviewer shall
be appointed by the Lord Chancellor on such other terms as he, after
consultation, shall think fit.”’.—[Martin
Horwood.] Brought
up, and read the First time.
Martin
Horwood: I beg to move, That the clause be read a Second
time. I am grateful for
that reminder, Mr. Gale, and I shall do my best to comply
with it. The new clause is designed to place on a statutory basis the
institution of the independent complaints reviewer. The office already
exists, but the new clause would facilitate significant alterations to
the current arrangements. There is an accusation that the independent
complaints reviewer is, to an extent, the creature of the commission.
If it is to continue to exist and to be useful even after the Bill
creates the charity tribunal—we also have the alternative of the
ombudsman route—some changes to the status of the independent
reviewer could be instituted, and the new clause is designed to effect
those. In many
respects, the new clause is self-explanatory. In opposing a similar
suggestion in another place, the Minister, Lord Bassam of Brighton,
suggested that the ombudsman route was advantageous. However, in
practice that is not really available to many charities. As I said, in
many respects the new clause speaks for itself and I will not detain
the Committee any longer in proposing it, but I would be interested to
hear hon. Members’ views on
it.
Edward
Miliband: The problem with the new clause is that it would
give powers to the independent complaints reviewer that already exist
for the parliamentary ombudsman. The danger is that it would confuse
the parliamentary ombudsman’s situation. I refer the hon.
Gentleman to the 2004-05 report by Jodi Berg, the independent
complaints reviewer, who says on page
3: “In
particular, an argument has been made for a new statutory office of
Independent Complaints Reviewer, changing the basis of appointment and
affording the office holder the power to award substantive compensation
to those adversely affected by the Commission’s actions or
omissions. My personal
view is that some caution needs to be exercised in relation to this
proposal. There is already a statutory avenue for complaints about the
Charity Commission, that being the Parliamentary and Health Service
Ombudsman, who is able to award redress for financial loss where she
deems it necessary to do so. It is doubtful whether a potentially
overlapping office would add anything for the citizen other than
confusion. My own role, in common with other similar offices, is based
on agreed terms of reference which underline my independence and
authority.” I tend to
agree with the ICR.
There is a response open to the
hon. Member for Cheltenham. He could ask, “How much power does
the parliamentary ombudsman have, and will Government accept her
recommendations?” I point out that the Charity Commission has
always accepted the parliamentary ombudsman’s recommendations,
which is an important record. I cannot speak for the commission, but I
think that it is good that it has done so. I do not think that the new
clause is advisable, and I hope that he will withdraw
it.
Martin
Horwood: I am grateful to the Minister for his comments.
He needs to understand why the parliamentary ombudsman route is not
available in practice for many charities. The independent complaints
reviewer is not empowered even to recommend that the commission pay
compensation
where a charity has suffered loss as a result of its practices. It also
routinely refuses to take up cases where there is a legal possibility
of pursuing the commission for compensation through the courts. In
practice, that route is potentially ruinously expensive for charities
and therefore not a realistic option, but it effectively bars them from
going to the
ombudsman. The proof of
the pudding is in what has happenedin the past decade. Since
the introduction of the Charities Act 1993, the parliamentary
ombudsmanhas investigated only eight complaints about the
commission’s conduct, upholding three and recommending financial
compensation in two cases. There are clear grounds for the new clause
and the financial compensation powers that I am proposing. I hope that
if I withdraw it, the Minister will reflect on the role of the
independent complaints review and the possibility of strengthening its
powers, making access easier and introducing powers of financial
compensation. Motion
and clause, by leave,
withdrawn.
| 
