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Baroness Hanham: My Lords, with those stirring words, I thank the Minister for his full reply. Unfortunately, it does not get me anywhere but it is all there and I take note of it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 92 and 93 not moved.]
Schedule 6 [Amendments of the planning Acts]:
Lord Rooker moved Amendment No. 94:
- Page 130, line 11, at end insert—
On Question, amendment agreed to.
Baroness Hamwee moved Amendment No. 95:
The noble Baroness said: My Lords, I am delighted to have this starry list of proponents of the amendment. Amendments Nos. 95 and 98 take out of the Bill the prospective repeal of outline planning permission. We have more than touched on the matter earlier today and at this hour of the night I do not believe that I need to persuade the House of their benefits. I beg to move.
On Question, amendment agreed to.
Lord Rooker moved Amendment No. 97:
On Question, amendment agreed to.
Baroness Hamwee moved Amendment No. 98:
On Question, amendment agreed to.
Lord Bassam of Brighton: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Bassam of Brighton.)
On Question, Bill passed and sent to the Commons.
Clause 23 [Community interest companies]:
Lord Phillips of Sudbury moved Amendment No. 100:
The noble Lord said: First, I welcome this part of the Bill, which is, in effect, a separate Bill, into the debate, and I hope that on these Benches we shall be able to deal with the amendments with practicality and dispatch.
In this probing amendment, which I hope is helpful, I simply seek to put in the Bill at the beginning of the community interest companies section the statement that community interest companies—or CICs, if I may call them that—are part of the Companies Act structure. That will be of immense utility to the many people who will struggle through this legislation, when it is enacted. Given that we are referring to community interest companies, many lay people will try to make head or tail of it. I accept that to a parliamentary draftsman these are redundant words, but I believe that occasionally friendliness towards the potential consumer is not a bad thing. I beg to move.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): It is difficult to know how to proceed, when the person who proposes an amendment admits at the start that the words are redundant. However, I believe that I can deal with it with practicality and dispatch.
We do not believe that the amendment is necessary, as it would do something which the Bill already does. Subsection (1) provides that the CIC is to be a new type of company. Clause 60 provides that the words used in this part of the Bill will have the same meaning as they have in the Companies Act 1985. That means that the word "company" in this clause means a company registered under the Companies Act 1985 or an earlier Companies Act. As a result, the Companies Act 1985 will apply to all CICs, as modified by the provisions of the Bill.
That reflects the policy stated in the Explanatory Notes on the Bill that CICs are to be subject to the general framework of company law. They will be
I agree that that does not totally deal with the noble Lord's point, which I think is one of presentation, but I believe that that is best taken care of in Explanatory Notes and other documents rather than the law itself.
Lord Glentoran: Having heard the noble Lord move the amendment and the Minister reply to it, it may be worth my while to make a general point about our approach to the Bill in this Grand Committee stage. I found the Bill far from straightforward and easy to understand, and I found it short on detail. The aim of most of our amendments will be to elicit clarity about the Government's thinking and to attempt to have more of the Bill clearly defined, either in the Bill, or, at least, in the schedules to it.
As I understand the Government's purpose in the Bill, the CIC is for people who are interested in community work and in doing good in the community. It is not for massive corporations which have bags of lawyers, company secretaries and goodness knows what else in a large organisation. This type of company needs to be understood by any group of people in a community who wish to form a community interest company. As I read the Bill at present, that is not the case. The Bill has schedules, regulations and schedules to the regulations. Some of the regulations are not there, and there are regulations about how people may do this or do that, and so on. The wording is far from clear or complete.
It will certainly be our objective to ensure that, by the time we finish with this part of the Bill, it will be in such a shape that the people to whom I have just referred who might want to form a CIC will be able to take something off the shelf, read it, perhaps obtain a little help from someone who knows about setting up a company and go ahead with it. If throughout the Bill I sound adverse, knocking or disapproving, it is not of the concept but of the detail in the small print.
Lord Phillips of Sudbury: I am grateful for the Minister's comments. None the less, I would ask him to give a second thought to this point. There is no difference between us as to effect of the words. At the end of his remarks, he said that people will have access to the Explanatory Notes and the Bill as a whole, and later in the Bill they will find reference to the Companies Act framework. That is true, except that in practical terms people will not have access to the Explanatory Notes or much else. I simply suggest that he keeps an open mind about bringing into Clause 23 the reference which comes later in the Bill, so that there is a convenient reference there right at the start of the Bill to make life easier. However, on that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Baroness Turner of Camden): I have to inform the Committee that if Amendment No. 101 is agreed to I cannot call Amendment No. 102 because of pre-emption.
Lord Phillips of Sudbury moved Amendment No. 101:
The noble Lord said: This is the only amendment on which I feel it necessary to speak at any length. It is a point which I covered in my speech at Second Reading and, indeed, others referred to it. There has been quite a bit of consultation in the voluntary sector since Second Reading. Certainly, all the feedback of which I am aware is in favour of the amendment or of something like it.
If the amendment is accepted by the Government, it will mean that subsection (3) reads:
I have discussed this with the two Law Lords who probably have the most experience of charities; that is, the noble and learned Lords, Lord Browne-Wilkinson and Lord Hoffmann. They both support the point and think that it is not a trivial one. The third point is that the argument that there may be confusion if CICs can also register as charities seems to me to be not only unproven but unsupported by the status quo, which is that there are these existing seven types, any one of which can be a charity. Indeed, there is no legal form that cannot be a charity. There can even be an oral charity. There is no confusion. For example, a company limited by shares which is also a charity does not cause any confusion, neither does a company limited by guarantee, and so forth.
The next point I make is that organisations which have large memberships, regional structures and/or large scale activities are unlikely to choose the proposed new corporate charity, which, as we understand it and as the Minister confirmed in a letter he kindly wrote me, is to be introduced in the forthcoming charities Bill. The proposed new corporate animal in the charities Bill is to be a light and easy structure, precisely so that charities without much, if any, professional support, can readily use the same. That is the point of the new "animal", if I can call it that.
Lawyers and accountants are very familiar with Companies Act entities and advise their business clientele on day-to-day issues relating to that type of corporate status. That familiarity will feed over into their advice to CICs, if they can be corporate charities
At present, the big and complex charities have to select between a company limited by shares and a company limited by guarantee. If the CIC was the third option within the Companies Act framework, we would advise our clients—I have talked to many solicitors and to the Charity Law Association, which has the same view—to use the CIC format. That is because it is specifically for community benefit. It is a natural fit with charitable status, unlike the company limited by shares and unlike, to a lesser extent, the company limited by guarantee. It will mean that if a CIC is also a charity there will be extra constraints on its constitution and functioning, for example, prohibiting dividends being paid to members or prohibiting board members being remunerated without the express consent of the Charity Commissioners.
Grant-giving charities will find life much easier if CICs can register as charities because they will then have no inhibitions in being able to make grants to them. I believe that the Minister has received a letter from Nigel Siederer, dated 5 February, which he wrote on behalf of the Community Development Finance Association and the Association of Charitable Foundations, making this point very strongly, and another such letter directly from the Community Development Finance Association.
Making this change will considerably simplify and shorten the Bill. I have not made all the consequential amendments that would flow right through the Bill and clutter up Committee Stage because they will only be relevant if this amendment is accepted by the Government or if we have to fight it through at the next stage.
This is an issue that seems to have crept under the wire in the earlier consultation that was carried out by the Department of Trade and Industry. Although a few people did refer to it, it was not one of the proposals on which comment was invited—I refer to pages 24 and 25 of the DTI consultation paper of March of last year. It also escaped the Charity Law Association when it first looked at the Bill. It has now reconsidered and sent a memorandum to the Minister on 30 January, broadly but firmly supporting the point. I am reliably informed that the Social Enterprise Coalition, which receives significant government funding and is comprised of non-profit bodies of all kind, from co-ops to charities, also favours the option that this amendment will give. One example of bodies that would favour CIC status for their charitable spin-offs is local authorities. Over 100 local authorities have already hived off their leisure facilities into free-standing charities, which are currently either industrial and provident societies or companies limited by guarantee. But this is a much more appropriate format.
Finally, it would surely be bizarre if an entity that, but for Clause 23, would have to register as a charity cannot do so but can, in its publicity, go on saying that
"Section 76 (Duty to draw attention to certain provisions for benefit of disabled) is omitted."
Page 130, line 14, leave out paragraph 5.
Page 150, line 22, at end insert—
"Section 76."
Page 150, leave out line 23.
House adjourned at a quarter before nine o'clock.
[The Deputy Chairman of Committees (Baroness Turner of Camden) in the Chair.]
Page 26, line 18, at end insert "which shall be subject to all relevant provisions of the Companies Acts as affected by the provisions of this enactment"
Page 26, line 25, leave out from "company" to end of line 29 and insert "may also be a charity"
"A community interest company may also be a charity".
Very briefly, the reasons for the amendment and, I maintain, its wisdom, are, first, that it would allow what would be an eighth choice for charities of the best format. There has to be a strong reason for denying them that choice. Secondly, there has to be a powerful reason to abandon the age-old tradition of charity law in this country, where charity is judged by objects not by legal form.
3.30 p.m.
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