Draft Protection of Charities Bill - Joint Committee on the Draft Protection of Charities Bill Contents


Appendix 3: Delegated Powers Memorandum


Letter from the Chairman to Baroness Thomas of Winchester, 25 November 2014

The pre-legislative Joint Committee on the Draft Protection of Charities Bill has received from the Cabinet Office the enclosed draft Delegated Powers Memorandum. The draft Memorandum covers provisions in the draft Bill which would give Ministers the power by regulations to extend the list of criminal offences set out in clause 8 of the draft Bill. These offences would automatically disqualify a person from acting as the trustee of a charity.

The Joint Committee considered the draft Memorandum at its meeting on 25 November and agreed that the views of the Delegated Powers and Regulatory Reform Committee would be most valuable and should be sought. Accordingly I am writing to you to request that your Committee consider the memorandum with a view to giving the Joint Committee advice on the appropriateness of the delegation as currently drafted. We would be grateful, if possible, for a view from the Committee before the House adjourns for the Christmas recess.

Delegated Powers Memorandum

A. Introduction

1) This Memorandum was prepared by the Cabinet Office for the Joint Committee on the Draft Protection of Charities Bill ('the Bill') to assist with its scrutiny of the Bill. The Memorandum identifies the provisions of the Bill which confer powers to make delegated legislation. It explains why the power has been taken and the nature of, and reason for, the procedure selected.

2) References in this Memorandum to a "section" are to a section of the Charities Act 2011, unless otherwise specified.

B. Provisions which confer delegated powers

3) The provisions in the Bill which confer these powers are identified below. The purpose of the delegated powers taken, and an explanation as to why the matter is to be left to delegated legislation and why the Cabinet Office has chosen a particular procedure, are then set out in relation to the relevant clauses.

a)  Clause 8(6): Automatic disqualification from being a trustee

b)  Clause 9(2): Power to disqualify from being a trustee

c)  Clause 13: Commencement

C. Territorial coverage and devolution

4) The Bill extends to England and Wales only. The powers conferred by the Bill are not exercisable in a devolved area.

D. Delegated powers

Automatic disqualification of charity trustees—New section 178A(4)
Bill provision:   Clause 8(6)
Power conferred on: Minister for the Cabinet Office
Power exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Affirmative Resolution

5) Under section 178, a person is automatically disqualified from being a charity trustee or trustee for a charity if convicted of any offence involving dishonesty or deception (there are other grounds but they are not relevant for these purposes). This does not apply to spent convictions, or in cases where a waiver has been granted by the Charity Commission.

6) Clause 8(6) inserts new section 178A which extends the range of criminal offences in respect of which a person is automatically disqualified, to:

a)  an offence to which Part 4 of the Counter-Terrorism Act 2008 applies;

b)  sections 13 and 19 of the Terrorism Act 2000;

c)  a money laundering offence within the meaning of section 415 of the Proceeds of Crime Act 2002;

d)  an offence under sections 1, 2, 6 or 7 of the Bribery Act 2010;

e)  an offence under section 77 of the Charities Act 2011;

f)  misconduct in public office, perjury or perverting the course of justice; and

g)  ancillary offences to the above offences i.e. inchoate offences of attempt, conspiracy, incitement; and secondary offences of aiding, abetting, counselling and procuring.

7) Clause 8(6) inserts new section 178A(4) which enables the Minister to amend by regulations the list of offences in new section 178A—offences may be added or removed.

8) The delegated power is considered necessary to ensure the list of offences remains up to date and appropriate. The criminal offences which have been identified as being appropriate to trigger automatic disqualification at this point in time are listed in new section 178A. In future, new criminal offences may be identified or criminal offences currently listed may no longer be appropriate, meaning the list needs to be updated. The prospect of a power to amend the list of offences was raised in consultation, and was generally well supported by respondents, provided the power is subject to the affirmative procedure.

9) If the Minister exercises the power to add new offences to new section 178A, automatic disqualification will be triggered whether the conviction for the new offence occurred before or after the date the new offence is added (see section 179(1)). A new offence is, by its nature, forward looking so it is unlikely automatic disqualification would be triggered by a pre-commencement conviction for the new offence. However if there was a time lag between the introduction of a new offence and its inclusion in the list of disqualifying offences, it is possible section 178A would have retrospective effect—ie a person could be automatically disqualified by a conviction for a new offence which occurred before the new offence was added to section 178A. The policy rationale is that a person with an unspent conviction for an offence which, by its nature and seriousness, makes them unfit to be in a position of trust controlling funds held for the public benefit, should be disqualified from being a charity trustee unless and until the conviction is spent or they apply for and are granted a waiver from the disqualification under section 181. There is an argument that such retrospection is unfair because the individual would not be able to take into account the risk of disqualification as a trustee at the time of the offence. However, the Cabinet Office considers it is justified as (i) it is unlikely that this knowledge would have any significant influence on their thinking or would deter them from committing the offence and (ii) it is also necessary to weigh in the balance, the fairness to others who could suffer loss if people who committed such serious offences were permitted to take on a role involving trust and responsibility for funds.

10) The Cabinet Office considers the affirmative procedure is appropriate to ensure there is sufficient Parliamentary scrutiny given that the effect of being on the list is to be automatically disqualified as a trustee, and the resulting degree of Parliamentary and charity sector interest.

Power to disqualify from being a charity trustee or trustee of a charity—new section 181A(5)
Bill provision:Clause 9(2)
Power conferred on: Minister for the Cabinet Office
Power exercisable by:   Regulations made by statutory instrument
Parliamentary procedure: Affirmative Resolution

11) Clause 9(2) inserts new section 181A which confers on the Charity Commission a new power to disqualify a person from being a charity trustee or trustee for a charity, by order (the Memorandum does not address this power because it is not the exercise of a legislative function—a disqualification order which is made by the Commission is not delegated legislation but a regulatory function which is subject to the procedure in new section 181C). The order may disqualify a person in relation to all charities or specified charities or classes of charity. The Charity Commission may make an order if it is satisfied that the person is unfit to be a charity trustee or trustee for a charity and one or more condition in new section 181A(4) is met.

12) The conditions in new section 181A(4) are:

a)  the person has been cautioned for an offence where conviction would trigger automatic disqualification (Condition A);

b)  the person has an unspent overseas conviction or caution for an offence that were it in the UK would automatically disqualify them (Condition B);

c)  the person has been found by HMRC not to be a fit and proper person (for the purposes of charity tax reliefs) (Condition C);

d)  the person has committed or was privy to past misconduct or mismanagement in a charity (Conditions D and E); and

e)  other behaviour that damages public trust and confidence in charities (Condition F).

13) Clause 9(2) inserts new section 181A(5) which enables the Minister to amend by regulations the list of conditions in new section 181A(4)—conditions may be added or removed. The delegated power does not affect the additional requirement for the Charity Commission to be satisfied that a person is unfit to be a charity trustee or trustee for a charity before it makes a disqualification order.

14) The delegated power is necessary to ensure the list remains up to date and appropriate. The conditions which have been identified as being appropriate grounds for a disqualification order at this point in time are listed in new section 181A(4). In future, new conditions may be identified or conditions currently listed may no longer be appropriate, meaning the list needs to be updated.

15) If the Minister exercises the power to add new offences to new section 178A, new section 181A(7) will apply, meaning that the Commission's power to disqualify based on Conditions A or B will be exercisable whether the conviction for the new offence occurred before or after the date the new offence is added—ie it could have retrospective effect. The policy justification for this is the same as for automatic disqualification (set out in paragraph 9 of this Memorandum).

16) The Cabinet Office considers the affirmative procedure is appropriate to ensure there is sufficient Parliamentary scrutiny given that the effect of being on the list is to be potentially subject to a disqualification order, and the resulting degree of Parliamentary and charity sector interest.

Commencement
Bill provision:Clause 13
Power conferred on: Minister for the Cabinet Office
Power exercised by Regulations made by statutory instrument
Parliamentary procedure: None

17) Clause 13(3) provides that the provisions of the Act will come into force on such day as the Minister for the Cabinet Office may by regulations appoint. Clause 13(4)(a) provides that the regulations may appoint different days for different purposes and clause 13(4)(b) provides that the regulations may make transitional, transitory or saving provision.

18) This is a standard clause which provides for the commencement of the Act by regulations; and for any transitional, transitory or saving provision to be made in consequence of the commencement regulations.

19) It is standard for commencement provision to be subject to no parliamentary procedure. The substantive policy will already have been debated and agreed.

13 November 2014

Cabinet Office

Letter from Baroness Thomas of Winchester to the Chairman, 16 December 2014

Thank you for your letter of 25 November 2014 in which you invited the Delegated Powers and Regulatory Reform Committee (DPRRC) to comment, with the assistance of a delegated powers memorandum, on the draft Bill on which your committee will be reporting in due course.

I enclose a memorandum from the DPRRC which I hope your committee will find of value.

Memorandum from the House of Lords Select Committee on Delegated Powers and Regulatory Reform

1) The Joint Committee invited the Delegated Powers and Regulatory Reform Committee to consider the provisions in the Draft Protection of Charities Bill that delegate legislative power.

2) We have the following observations on the delegated powers conferred by the draft Bill, and on the Cabinet Office's memorandum about those powers.

CLAUSE 8—Automatic disqualification from being a trustee

3) Clause 8 of the draft Bill would amend section 178 of the Charities Act 2011("the 2011 Act") so as to provide for the automatic disqualification of a person from being a charity trustee if he or she is convicted of: (a) an offence specified in new section 178A; or (b) an offence, not specified in new section 178A, involving dishonesty or deception[326]. Subsection (1) of the new section 178A, inserted by clause 8(6) of the draft Bill, specifies a number of criminal offences (which may not necessarily involve dishonesty or deception), conviction for which would result in automatic disqualification. A person who acts while disqualified by virtue of these provisions would be guilty of a further criminal offence under section 183 of the 2011 Act.

4) Subsection (4) of the new section 178A would enable the Minister for the Cabinet Office by affirmative procedure regulations to amend the section by adding further offences or by removing offences already specified. We consider neither the delegation nor the level of scrutiny to be inappropriate.

5) However, paragraph 9 of the Cabinet Office's memorandum mentions that exercise of the power could have possible retrospective effect. This is on the basis that, if the Minister were to make regulations adding a further offence to the list in new section 178A(1), persons who had been convicted of that offence before the regulations came into force would (unless the conviction is spent for the purposes of the Rehabilitation of Offenders Act 1974) be automatically disqualified from acting as a charity trustee from the moment the regulations came into force. (It is clear that the power could be exercised in this way due to the amendment made by clause 8(8) of the draft Bill to section 179(1) of the 2011 Act.) The Cabinet Office justifies the policy on the basis that it is necessary for public protection, despite any possible unfairness to the individual. It also points to section 181 of the 2011 Act which allows the Charity Commission to grant a waiver from the disqualification.

6) We would point out that this "retrospection" issue also arises in relation to charity trustees convicted of the offences specified in new section 178A(1) before the provision comes into force. Such persons would be automatically disqualified from being charity trustees from the moment that new section 178A comes into force. This also follows from the amendment made by clause 8(8).

7) But we doubted whether there could be any risk of retrospective effect. This is because the disqualification would apply only prospectively from the commencement of new section 178A or (as the case may be) regulations made under subsection (4). There appears to be a parallel with the system for making orders disqualifying convicted persons from working with children considered by the Court of Appeal in the case of R v Field [2003] 3 All ER 617. The Court held that it could be applied to offences committed before the system came into force, and that this did not contravene Article 7 of the European Convention on Human Rights (ECHR) which prohibits a heavier penalty being imposed than the one that was applicable at the time the criminal offence was committed. The Court said:

    "Assuming that a disqualification order is not a criminal penalty, the Secretary of State's interpretation does not offend against the presumption against retrospective legislation. That presumption is based on concepts of fairness and legal certainty, which dictate that accrued rights and the legal status of past acts should not be altered by subsequent legislation. But the effect of a disqualification order is entirely prospective, because it only affects future conduct".

8) As to the question of whether disqualification under the new section 178A constitutes a criminal penalty for the purposes of Article 7 of the ECHR, we tend to the view that it is not for the reasons set out in paragraph 24 of the Cabinet Office's Human Rights Memorandum. However, this is an issue that the Joint Committee on Human Rights may wish to consider.

9) Nonetheless, we consider that there is an important issue about the commencement of new section 178A, and of regulations made under the power conferred by subsection (4), in respect of persons already convicted of an automatic disqualification offence specified in subsection (1), or that could be specified under subsection (4). It might be thought unfair to impose immediate, automatic disqualification on such persons, and the consequent risk of prosecution for the offence in section 183 of the 2011 Act (which carries a maximum penalty of two years imprisonment), without allowing sufficient time for completion of any legal process necessary to allow them to withdraw from the affairs of the charity. The charity itself may need time to find a replacement trustee.

10) The Joint Committee may wish to consider this aspect. It occurred to us that two months might be an appropriate period to allow as it would reflect the convention that, except in cases of particular need, primary legislation does not come into force less than two months after the date on which it is enacted[327].

11) It is also for consideration whether the Charity Commission should be required to take steps to publicise the provisions of new section 178A (if enacted), and of regulations made under subsection (4), so that charity trustees with prior convictions for the offences specified would be made aware of their duty to withdraw from the affairs of the charity within two months of the provision coming into force.

CLAUSE 9—Power to disqualify from being a trustee

12) Clause 9(2) of the draft Bill inserts a new section 181A into the 2011 Act. This would confer on the Charity Commission a power to disqualify a person from being a charity trustee in relation to all charities or specified charities or classes of charity. The Commission could exercise this power if it is satisfied both that the person is unfit to be a trustee and that at least one of the conditions in new section 181A(4) is met. The conditions include the following:

·  The person has been cautioned for an offence where conviction would trigger automatic disqualification (Condition A).

·  The person has an unspent overseas conviction or caution for an offence that would result in automatic disqualification had the conviction been in the United Kingdom (Condition B).

13) New section 181A(5) would enable the Minister by affirmative procedure regulations to amend this list of conditions by adding new ones or removing existing ones. Paragraph 14 of the Cabinet Office's Delegated Powers Memorandum explains that this delegated power is necessary to ensure the list remains up to date and appropriate. As with new section 178A(4), we would regard neither the delegation nor the scrutiny procedure as inappropriate, subject to one concern.

14) This is that the power conferred on the Minister by new section 181A(5) to add a condition to those already specified in subsection (4) seems very wide. There is no requirement that the new condition should specify that the charity trustee has committed a type of discreditable conduct described in the regulations which could have a bearing on his or her fitness to be a trustee of the charity (or any charity). This is a surprising omission.

15) Paragraph 15 of the Cabinet Office's memorandum points out that new section 181A(7) would apply if the Minister exercises the power to add offences to new section 178A(4). This means that the Commission's power to disqualify based on Condition A or B in the new section 181A(4) would apply whether the conviction or caution occurred before or after the commencement of the new section. The Cabinet Office suggests that this too could have a retrospective effect, and it relies on a similar policy justification as that for the power in new section 178A(4).

16) Again we are not convinced that the exercise of this proposed delegated power could be retrospective. The power of the Commission to disqualify would apply only prospectively, i.e. after regulations made under new section 178A(4) had come into force; and it could not be exercised unless the Commission were also satisfied that the person is unfit to be a charity trustee and had first given the individual concerned notice of its proposal to make a disqualification order and invited him or her to make representations (see new section 181C(2)).

17) Moreover, any disqualification order issued by the Commission would not take effect until the time limit had expired for the charity trustee to appeal against the order to the First-tier Tribunal: see new section 181B(3). The trustee to be disqualified would therefore have adequate time to disengage from the affairs of the charity before he or she could be guilty of the offence under section 183 of acting while disqualified.

18) So the concerns we express in relation to new section 178A(4) (see paragraphs 9 to 11 above) do not apply here.

16 December 2014


326   Automatic disqualification also applies in certain other circumstances listed in section 178 which are not relevant for present purposes. Back

327   Clause 13 provides for the Bill to be brought into force by commencement regulations. Therefore, if a Bill based on the draft received Royal Assent on 1st July, the convention would mean that the Minister should not make a commencement order to bring the Bill's provisions into force sooner than 1st September. However, the convention would not govern when the Minister made the Order. There would be nothing to prevent the Minister from making the Order on 31st August. Back


 
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