---

Lord Borrie: I have a feeling that Amendment No. 108 is more desirable than Amendment No. 107. However the Bill eventually lays down its requirements, if the charity is small and desires to be registered in order to obtain certain advantages of respectability and of being a potential recipient of certain moneys, and it complies, why not let it be registered, no matter how small it is?

Amendment No. 107, the main one put forward by the noble Lord, Lord Hodgson, makes a radical difference—a five-fold difference—from £5,000 to £25,000. He has carefully explained that the difference would cover 50,000 charities, so it makes a lot of difference one way or another.

The noble Lord, Lord Hodgson, thinks that we should all feel, as Britons, the love of freedom and the dislike of bureaucracy, but bureaucratic activity is a pejorative phrase, whereas registration is a polite phrase. There would be registration for a whole number of purposes, including concern about any misdeeds which might be committed. There would be misdeeds on a smaller scale if the figure was below £25,000 rather than into the hundreds of thousands. None the less, the limit having been £1,000, £25,000 seems a major difference whereas the Government's £5,000 takes into account inflation and so on. I am surprised that the noble Lord wants to make such a radical difference in the threshold at which registration would be required as distinct from optional

Lord Swinfen: I believe that I know the answer, but perhaps we should have it on the record. The smaller charities which wish to be registered can indeed be registered. I should be grateful if the Minister would confirm that. It is extremely important for very small charities which need to raise funds from grant-making
 
8 Mar 2005 : Column GC280
 
bodies. The vast majority will not make donations to unregistered charities—they find that extremely difficult.

Furthermore, in Amendment No. 108 my noble friend wishes to change "may" in line 34 to "must" at the charity's request to be registered. I am not sure that I agree with him because the charity, in order to be registered, needs to satisfy all the requirements of the Charity Commission and that should not be watered down. A charity set up purely to provide bed socks for granny would not and, in my view, should not be registered.

Lord Phillips of Sudbury: I rather take the part of the noble Lord, Lord Borrie, on this one. The increase to an income of £25,000 is far too high. That would represent a capital base of £500,000, if one had that sum on deposit. Although I wholly agree with the sentiment with which the amendment was moved and am absolutely committed, as is the noble Lord, Lord Hodgson, to making life for the small charity as easy and unbureaucratic as possible, I would rather see that easy regime downstream from that of registration itself.

Registration is the most effective way of enabling members of the public to check up on a charity. The register is free to access and the one thing above all others that deters the very few rotten apples in the charity barrel from playing fast and loose is that they are registered. Anyone can have access to the registration; charities are required to put the registration number on their circulars, letters and so on.

If we take away that registration, I fear that there would be a significant increase in impropriety. If there is one thing above all others that would break the golden chain of trust between the public and the charity sector, it would be if instances of impropriety were significantly to increase. From my experience of the sector, I fear that you do get the small man who is playing fast and loose with charitable status, paying himself huge expenses and depriving the public of the purported charitable benefit. For that reason, reluctantly, I oppose the amendment. Whether there could be an annual increase, as there is with inheritance tax, to keep pace with inflation, so that we do not have to keep laying orders, is a small matter. As I said, I would rather see constraints on the Charity Commission, the Inland Revenue, and so on downstream.

Lord Shutt of Greetland: I am inclined to agree with my noble friend. I think that I could be persuaded that the figure might be £10,000, but much beyond that, I think that we will create problems because of what could be the capital sum involved in misdemeanours. There is one other point. There seem to be three elements here. We have the Charity Commission as a regulator; the law of the land; and the Inland Revenue. If the Charity Commission and registration is out of the way, the other two remain. The charity is still a charity if it has charitable objectives, whether or not it
 
8 Mar 2005 : Column GC281
 
is registered. Because it is a charity, it will seek repayment of any taxes possible and may therefore need a relationship with the Inland Revenue.

Therefore, if we were to go along with the amendment of the noble Lord, Lord Hodgson, would that mean that the Inland Revenue would have to do rather more to check whether a charity is a charity whereas, at the moment, it may just rely on registration and say, "If it is registered, we repay the money"? That is a further problem.

Lord Bassam of Brighton: I initially thought that this was quite a simple and straightforward group to deal with, so I was going to say as little as possible. I will still try to say as little as possible, because we want to make progress.

My starting point is the need to get the balance right. Of course the noble Lord, Lord Hodgson, is right: we do not want to end up burdening charities with ludicrous quantities of red tape. We want to reduce the scope for that as much as possible. Inside this Minister there is a deregulatory heart beating firmly and powerfully. But it is worth going back to where we started from and the Strategy Unit's original proposal, which was extensively consulted on. It was the unit that came up with the figure of £5,000. The Strategy Unit's proposal attracted great interest and comment, apparently—it had the second highest number of responses of any group of recommendations in the review. So it is obviously something of a hot issue.

The other thing to remember in this debate—

Lord Hodgson of Astley Abbotts: I believe that the responses were that the charities might not be able to register. The concern expressed in the response to the Strategy Unit review was that they might be prevented from registering unless the figure was higher. That is why the two amendments should be taken together. No one is trying to prevent them from registering; as the noble Lord, Lord Borrie, pointed out, they can register. It is just a question of the point at which they have to register.

Lord Bassam of Brighton: I understand that point. I believe that the noble Lord, Lord Swinfen, made an important point, encouraging me to put on the record—which I am quite happy to do—that small charities see the ability to register as being extraordinarily important. It gives them a "quality mark", which is extraordinarily important in terms of seeking out donors and attracting public credibility. We recognise and acknowledge that. There is not to be a bar on charities registering which have very small sums to disburse or use from a charitable purpose. We do not want to prevent them registering; in fact, we want to encourage them to continue to do so, because of the benefits that we see, the Charity Commission sees and the small charities themselves see.
 
8 Mar 2005 : Column GC282
 

There is a flexibility here. As the noble Lord, Lord Phillips, understood in his comments, the figure is variable by order. Under new Section 3A(8), the Secretary of State,

"may only make an order under subsection (7) above",

so far as it relates to the matter.

So there is flexibility to inflate the sum of £5,000 when it seems sensible and rational to do so. If we raised it to £25,000, we would take out of the registration threshold a large number of charities. In raising the threshold from £1,000 to £5,000, we take out 38,000 charities from the registration requirement. That does not prevent them registering. Those charities have an annual income of more than £103 million. If we raised the threshold from £1,000 to £25,000, rather than £5,000, we would take out a further 47,000 charities, with a combined annual income of something in excess of £0.5 billion. Those charities and sums of money would in effect go off the regulatory radar.

I believe that we have the balance about right. I understand the point about bureaucracy and accountability, but it is extremely important to retain public confidence in small charities. In settling on the £5,000 figure, that seems to be what most charities believe to be the right level.

As for Amendment No. 108, I have better news for the noble Lord, Lord Hodgson of Astley Abbotts. Having heard what he had to say about the amendment, I am prepared to take it away and give it some further consideration. However, I heard what the noble Lord, Lord Swinfen, said, and I shall balance that in my final judgment on the issue.

---