DCH 295 National Housing Federation
DRAFT CHARITIES BILL PUBLISHED MAY 2004
SUBMISSION BY THE NATIONAL HOUSING FEDERATION TO
THE JOINT PARLIAMENTARY COMMITTEE
Executive Summary
The National Housing Federation welcomes the draft
Charities Bill as a significant advance in charity law. The key
points in this submission are:
- The charitable objects described in the draft
Bill should be interpreted as widely as possible to permit a broad
range of activities to promote social improvement and sustainable
neighbourhoods;
- We should like CIOs be able to convert to, or
merge with, charities that are formed as companies limited by
guarantee or Industrial and Provident Societies; and
- Exempt charities should be able to be listed
on the Charity Commission's register of charities, while being
regulated by their relevant lead regulator.
Introduction
1. The National Housing Federation welcomes the
opportunity to comment on the draft Bill. The Federation represents
some 1,400 not-for-profit housing associations, which between
them own or manage around
2 million homes in England. They play an important role, not just
in housing, but also in regeneration and the creation of mixed
communities and sustainable neighbourhoods. Most of our members
are charities, with over 700 charitable Industrial and Provident
societies and 200 charitable companies and trusts. The majority
of our members are also registered with the Housing Corporation,
a government body that funds and regulates them.
2. The Federation broadly welcomes the draft
Bill, and in particular the explicit inclusion within the definition
of charitable purposes of rural and urban regeneration, the advancement
of citizenship or community development, and the provision of
accommodation to those in need.
3. We have restricted our comments to those areas
of the draft Bill that will have the greatest impact on our members.
In particular, our response focuses on the potential impact on
our members that are constituted as Industrial and Provident Societies
and the role of the Housing Corporation as a "principal regulator".
General
4. While we welcome the draft Bill, we should
like to see charity legislation consolidated into one Act, to
make it easier for charity trustees and others to understand the
law.
Charitable Purposes
5. Although the categorisation of charitable
purposes does not appear significantly to change the range of
purposes that are to be considered charitable, we think it is
helpful to raise the public profile of charities by highlighting
the main groupings.
6. We should wish to see the Charity Commission
give guidance that interprets these headings as broadly as possible.
In particular, "the advancement of citizenship or community
development" should be explicitly defined in such as way
as to encompass not just physical but also social improvement
to aid the creation of sustainable neighbourhoods.
7. The draft Charities Bill and any subsequent
proposals should be tested to ensure that they are sufficiently
broadly drawn to encompass a wide spectrum of housing association
activities as charitable purposes. In doing so, recognition should
be given that associations in general provide housing, care and
neighbourhood services to a wide range of people, and also that
specialist services are targeted at particular groups.
The test should cover the work housing associations
do to:
- provide affordable rented, intermediate renting
and low cost home ownership housing to a wide range of income
groups and communities;
- provide key worker housing targeted at particular
groups;
- manage housing, open spaces and local facilities,
including on behalf of other bodies;
- assemble land for redevelopment, build new homes
and refurbish properties;
- demolish homes as part of housing market renewal
and lead neighbourhood renewal projects;
- provide care and support services to a wide range
of income groups and targeted in some schemes at particular groups;
- provide student housing;
- support community and social enterprises;
- deliver, manage and support a range of neighbourhood
services to a wide range of groups (and targeted in some schemes
at particular groups) including training and employment schemes,
community facilities, childcare, after school clubs, youth projects,
sports activities, affordable credit, healthy living projects,
etc; and
- deliver and manage shops and other local facilities
such as health centres.
8. We believe that the draft Bill will make charitable
status more attractive for associations. However, there may be
a significant minority of associations that will wish to remain
non-charitable while operating within the range of objects permitted
for registered social landlords under the Housing Act 1996. It
is important that the Housing Corporation should be ready to support
an association in changing its rules, if necessary, in order for
it to remain non-charitable, should the association have a good
case for doing so.
Public Benefit Test
9. We agree that public benefit should be one
of the essential requirements of charitable status and believe
that it is helpful to leave the definition of "public benefit"
open in the Bill so that it can adapt over time as public opinon
develops. However, it would be useful for the Charity Commission
to issue updates from time to time, to clarify the position.
Charitable trading
10. We strongly support the recommendation in
the Strategy Unit's consultation paper, Private Action, Public
Benefit, that charities should be allowed to undertake appropriate
trading within the charity without the need for a trading company.
For charitable housing associations, the establishment of trading
subsidiaries adds substantially to their legal and administrative
costs and can add greatly to the complexity of the development
of mixed communities, where some people own their own properties
and some rent.
Charitable Incorporated Organisations
11. We welcome the introduction of the CIO, which
will allow charitable housing associations to be incorporated
without registering with Companies House. However, we believe
that it is important that the framework for CIOs ties in to the
legislative framework for companies. For example, it appears that
under the proposed legislation, a CIO could have the same name
as a company registered at Companies House with the consequent
potential for public confusion. Also, it appears that CIOs may
be constituted with unlimited liability. It is important for those
who deal with such bodies, to know whether or not they have limited
liability, and this should be disclosed on letterheadings etc.
12. Although there is provision in the Bill for
charitable companies and charitable Industrial and Provident (I&P)
Societies to convert to CIOs, there appears to be no provision
for a CIO to convert to a charitable company limited by guarantee
or I&P Society. Many housing associations now operate within
group structures, and it would be beneficial if CIOs could convert
to the same legal structure as other members in the group. Provision
should also be made for CIOs to be able to amalgamate with, or
transfer undertakings to, other charitable companies and I&P
Societies.
Charity Appeal Tribunal
13. We welcome in general the introduction of
a Charity Appeal Tribunal. As far as exempt charities are concerned,
it seems that if a Charity Commission inquiry is initiated at
the request of a principal regulator, such as the Housing Corporation,
then an appeal may be made to the Charity Appeal Tribunal. However,
if a decision is made by the principal regulator itself in respect
of its duties to an exempt charity, then the route of appeal is
unclear. We propose that exempt charities should be able to refer
decisions based on a principal regulator's interpretation of charity
law to the Charity Appeal Tribunal.
Exempt Charities
14. We should like clarification on whether exempt
charities may be registered with the Charity
Commission (7 3A) and, if so, whether this is at the discretion
of the Charity Commission. Current practice by the Charity Commission
is that exempt charities are not allowed to be entered on the
register of charities. This causes problems for many exempt charities
in demonstrating that they are in fact charitable. It would therefore
aid exempt charities to be able to be listed on the register,
while being regulated by their principal regulator. In
a similar manner, Industrial & Provident Societies are listed
at Companies House, but are registered and make annual returns
to the Financial Services Authority.
15. We note that associations that are currently
exempt charities but not registered social landlords (RSLs) will
have to register with the Charity Commission. This will affect
just over 200 of our members - most of them small associations
with fewer than 500 properties. We agree with this proposal for
stand-alone associations. However, where there is a group structure
with a parent association that is an exempt charity regulated
by the Housing Corporation, it may be more appropriate for the
charity to have the Housing Corporation as principal regulator
in respect of its charitable nature rather than the Charity Commission.
Role of the Housing Corporation
16. As the regulator of registered social landlords
(RSLs) the Housing Corporation plays an important role in the
way that housing associations are run. In order to avoid duplication
of regulation, we should wish to see all charitable registered
social landlords, whether formally exempt charities or registered
charities, have the Housing Corporation as their principal regulator
for charity law.
17. Although we agree with the principle that
exempt charities should comply with charity law to the same extent
as registered charities, we are very concerned that there should
be no increased administrative burden on exempt charities. For
example, we should want to be assured that exempt charities would
not have to produce two versions of financial information - one
to satisfy the Housing Corporation's own regulatory requirements,
and one to satisfy the Housing Corporation as a principal charity
regulator.
18. Relevant stakeholders should therefore be
involved at an early stage in discussions with their principal
regulator as to how the compliance objective may be achieved without
over-burdensome regulation.
Remuneration of Trustees
19. We note the proposal that trustees of a
charity should not be able to be paid for their services as trustees
and that paid trustees should be in a minority. The Housing Corporation
now allows for the remuneration of housing association board members
where there is a compelling business case for its being in the
best interests of the association. We believe that this principle
should apply to all charities and that large, complex charities
such as housing associations should, where there is a business
case, have the choice of paying for the time of board members.
Conclusion
20. While the National Housing Federation overall
supports the draft Bill, we believe that there should be greater
clarity concerning the role of principal regulators and greater
flexibility for CIOs to fit in to group structures and merge with
other charities.
Contact details:
Richard Reger
Head of Governance
National Housing Federation
Lion Court
25 Procter Street
London WC1V 6NY
Tel 020 7067 1010
Email: richardr@housing.org.uk
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