Joint Committee on the Draft Charities Bill First Report


11 Beyond the draft Bill

Consolidation

381. The draft Bill contains 48 clauses. Some 35 of these amend or add to the Charities Acts of 1992 and 1993. This makes it hard to understand the draft Bill on its own. It also means that when the new Act is in force, small charities - run by volunteers from the proverbial kitchen table - will have to study three different Acts and the relationship between them in order to know the current state of statute law. After the 1992 Act was passed, the 1993 Act was brought forward as a consolidation measure, but it did not replace all the aspects of the 1992 Act. The Charity Law Association and BTCV have asked for a consolidation Bill to bring together the new legislation with the 1992 and 1993 Acts.[405] The PFRA wrote to "implore the Home Office to consolidate these changes into one Bill to improve the clarity of the new legislation", echoing the National Housing Federation's suggestion that "charity legislation [is] consolidated into one Act, to make it easier for charity trustees and others to understand the law".[406]

382. We believe that the law should be as accessible as possible and that this new legislation should be consolidated with the 1992 and 1993 Acts as soon as possible. One radical way of achieving this would be a one stage process in which the Bill introduced in the next parliamentary session should contain not just the clauses in the draft Bill but also re-enact the surviving sections of the 1992 and 1993 Act. In terms of parliamentary procedure, this would not be a consolidation Bill which can pass through an expedited process. But it would produce for the charity sector a single Act setting out the statute law on this subject. Although such a Bill would be longer than the draft Bill we have considered, the additional provisions need not require extra parliamentary time because they have already been passed and on the statute book for more than a decade.

383. We recommend that the Bill to be brought forward by the Home Office in the next parliamentary session should combine the provisions of the draft Bill with the surviving sections of the 1992 and 1993 Charity Acts to enact a single Charity Act 2005.

384. If the Government do not accept the recommendation above, we recommend that a further consolidation Bill be brought forward subsequently to draw together all statute law on charities into a single Act.

385. With or without such a consolidation, there will be a need for the Government to explain to the sector what the new legislation changes - and what it does not. We envisage a booklet aimed at volunteer-run charities to be issued by the Home Office (not the Charity Commission) at the time the new legislation receives Royal Assent, setting out in plain English the effect of the new Act.

386. We recommend that the Home Office publishes a plain English guide to the new Act aimed at small volunteer-run charities.

Success factors

387. Throughout our inquiry we have asked how the success of the draft Bill should be measured. The Home Office has produced two papers for us on this subject.[407] They said:

"The legislation is founded on recommendations made by the Strategy Unit, in its report "Private Action; Public Benefit", published in September 2002. The impact of the legislation will be assessed against the aims identified in that report, which are to:

(a)  modernise charity law and status to provide greater clarity and stronger emphasis on the delivery of public benefit;

(b)  improve the range of legal forms enabling organisations to become more effective and entrepreneurial;

(c)  develop greater accountability and transparency to build public trust and confidence;

(d)  ensure independent, fair and proportionate regulation.

388. Mr Etherington of the NCVO told us that a successful outcome from the Bill would be:

"A growing sector, growing levels of public confidence, as measured, I think, by growing levels of fund-raising income and growing levels of volunteer engagement…..[more participation] … but we do not think that there will be a huge burgeoning of numbers of charities as a result of this Bill".[408]

389. We accept that the high-level objectives for the draft Bill are not susceptible to quantitive analysis. Nonetheless we would expect to see quite soon after enactment specific examples of the draft Bill either achieving the positive results forecast for it or failing to do so. Much will depend on how the Charity Commission conducts its tasks. There will be some figures which can be measured:

a)  The number of appeals to the Charity Appeal Tribunal - the Regulatory Impact Assessment envisages a very tentative figure of 50 cases a year - a substantial variation either way from that figure would require some explanation. Similarly, the success rate of appeals will merit closer study.

b)  The number of Charitable Incorporated Organisations set up - while a slow initial take-up might be expected, we would expect hundreds of charities to be using this model within three years.

c)  The number of mergers - it may be that there will be a large number of mergers initially falling to a lower rate after the backlog is cleared.

390. All these figures should appear in the Charity Commission's annual report and all interested parties will be able to question whether the individual provisions of the Bill are living up to expectations.

391. We recommend that the annual reports of the Charity Commission should set out the measurable consequences of the provisions in the new legislation and explain any variations.

392. We have been told that the Home Office will monitor the impact of the legislation, and that it proposes to conduct a review of the legislation after a period of five years following enactment and that the review will assess the impact of the legislation, and will be published.[409] While at first concerned that this five year review period seems long, we accept that the high-level objectives of the draft Bill probably cannot be judged properly over a shorter timescale.

393. We recommend that the Bill should contain a requirement for the Secretary of State to review and report to Parliament on the impact of the Act no later than five years after Royal Assent and that report should include an assessment of the effect of the legislation on public confidence in charities, the level of charitable donations and the willingness of individuals to volunteer.

394. We have referred in paragraphs 172-192 above to the accountability of the Charity Commission to the sector and to Parliament. Our firm impression from taking oral evidence from the Commission during this inquiry is that a more regular airing of the Commission's work before a parliamentary committee would be mutually beneficial. While the Commission's decisions will, under the draft Bill, be accountable to the Charity Appeal Tribunal, its overall operation will not. A regular annual evidence session with a departmental committee would provide an opportunity for the Commission to explain its finances, working methods and policy.


405   Q241 (Mr Lloyd) Ev 89, paras 162 and 120 Back

406   Ev 615, para 4 Back

407   Ev 296-7 and p194 Back

408   Qq4-6 Back

409   See p195 Back


 
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