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Lord Phillips of Sudbury: My Lords, I am most grateful to the noble Lord for giving way. Is he aware that the Charity Commission would like this amendment?

Lord Hodgson of Astley Abbotts: My Lords, I am not aware of whether the Charity Commission wish to have this amendment. But I am saying that I do not think that it should have it; I think that it should be operating. Its responsibility is to interpret the public benefit test on a level playing field which this Bill currently provides. I do not think that tilting the playing field to pick out one particular aspect is the right way forward. The Government have got it right. They should stick with it. I hope that they will continue to reject the amendment.

Lord Bassam of Brighton: My Lords, in Committee on 28 June, I undertook to study and to reflect very carefully on the contributions made by many noble Lords to the debate on that occasion and at previous stages. We have debated this on several occasions. Although we approached this in a fairly rigorous and
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open-minded way, our views remain the same as ever. That may be of some comfort to the noble Lord, Lord Hodgson. I want to go over our thinking on this because it is right for me to put it on the record. It is a matter of central importance to the Bill.

The Charity Commission will be required to consult on and to issue guidance on the operation of the public benefit requirement. The requirement is that a purpose falling within the list of purposes in Clause 2(2) must be for the public benefit if it is to qualify as a charitable purpose. We all understand that; we have had that discussion on many occasions.

It will, as now, be for the commission to apply the public benefit requirement in determining whether a particular organisation is a charity. There is, rightly, a great deal of interest in the commission's proposed approach to its task of judging public benefit, and in the legal basis of the public benefit requirement. The commission has issued a publication, called Public Benefit—the Charity Commission's Approach, to illustrate how it would be likely to approach the task of ensuring that charities meet the public benefit requirement. That publication also describes the legal basis for the commission's task.

The adequacy of the legal basis is very important, as it will enable the commission to carry out credible and effective checks on the public benefit of charities. We remain confident of the adequacy of that legal basis. The commission is clear in its publication that it will apply the general overarching principles derived from the legal basis to carry out public benefit checks. Those checks will be applicable both to new organisations applying to register as charities and to charities that already exist, and which may have been on the register since it started in 1960.

The commission says that it will be able to carry out public benefit checks under the Bill as drafted. If the commission carries out a check that exposes an apparent lack of public benefit in a charity, one of two consequences could follow. First, if the charity is not delivering public benefit but is able to, the commission's action might include helping the charity to change its stated purposes or its activities so that in future it is benefiting enough of the public to meet the public benefit requirement. The commission might also use its regulatory powers to enforce change if the trustees are failing to co-operate in introducing change themselves. The commission does not expect to have to resort to such action in more than a few cases.

Secondly, in cases—these are likely to be pretty rare—where the trustees are co-operating with the commission but the charity simply cannot in all the circumstances provide public benefit, the commission's action might include removing the charity from the register and making a legal scheme. The scheme would ensure that any charitable assets of the organisation were in the future applied for other charitable purposes close to any purposes that have ceased to be charitable—something we discussed earlier. That would happen only where it was not possible for an organisation to meet the public benefit requirement. I emphasise that the new purposes would
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be close to the original ones so that, for example, the assets of a charity whose original purposes were educational would be applied for new purposes which were educational. Those two sets of consequences will follow both in the case of fee-charging charities and in the case of charities that do not charge fees.

The noble Lord, Lord Phillips, has described his amendment in the past—he has repeated this today—as a modest one and, in the best sense of the word, I agree. It is modest to the extent that we do not believe it would change anything. That is because, in setting out the legal principles by which it will apply the public benefit requirement, the Charity Commission says that it can already, and without the need for the amendment, take into account the effect of fee-charging on an organisation's ability to meet the public benefit requirement. Our reflection over the summer has confirmed us in our belief that Part I as drafted will give charity law a proper foundation for many years in the future. It will also allow the commission to discriminate effectively in practice between organisations that provide a true public benefit and those that do not.

In conclusion, I am drawn to the comments made by the noble Lord, Lord Hodgson. We have struck a balance. It has been arrived at through careful consideration of the issues. There has been consultation. The Charity Commission itself has undertaken very careful assessment and consultation with stakeholders in the past. The position that we have reached is reasonable and fair. The point raised by the amendment may already be taken into account by the commission if it believes it to be relevant, which no doubt it will.

Lord Wedderburn of Charlton: My Lords, will my noble friend say a brief word about the policy of the Government in this area? Certain approvals by the Minister are required for staff appointed by the commission—for example, their terms and conditions of employment. Do the Government envisage that they will encourage the commission to appoint sufficient research staff to undertake the enquiries and consultations needed in this very difficult area?

Lord Bassam of Brighton: My Lords, I am reluctant to respond to my noble friend because of the conventions of the House.

It is not for the Government to interfere in the employment policies and practices of the commission—it is an independent body. Noble Lords have said on a number of occasions that they greatly value that independence. The noble Lord, Lord Hodgson, has argued that we should go further and the noble Lord, Lord Phillips, has agreed with him in the past. If the commission feels that it is right to review its staffing arrangements to meet the requirements of exercising more broadly the public benefit test, no doubt it will be for the commission to make that qualification and determination.

I would like to respond to the point made by the noble Baroness, Lady Warwick. She asked if the commission would be consulting with the Higher
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Education Funding Council on the public benefit test for universities. The answer is an unequivocal yes, of course it will.

Lord Phillips of Sudbury: My Lords, I am grateful to all noble Lords who contributed to this mini-debate and particularly to the noble Lords, Lord Best and Lord Borrie, and the noble Baroness, Lady Warwick, for supporting the amendment.

If the Minister thinks that the Bill strikes a balance on this central and important issue, I would not like to depend upon it. There are difficult conventions about the role and view of the Charity Commission which I do not wish to transgress. But I reassert what I said when I intervened a few moments ago: the Charity Commission would wish for the amendment for the reasons that I endeavoured to explain which have their basis in the common law and the case of Re: Resch. It was notable that the Minister—although he said much—said absolutely nothing about those key arguments that are not novel, but ones I have addressed to the House on two previous occasions. I suggest that the reason he did not address them was that what I said is incontrovertible. It is not only my view but that of distinguished charity lawyers and academics.

It is the job of this House to legislate in a manner which is "seaworthy"—which will achieve on the ground that which we want it to achieve and which will give support to those who have to implement it. This central issue in the Bill is not seaworthy. There is no partisanship in the amendment. It follows the best practice which is already the norm in the independent school sector. I wish to test the opinion of the House.

4.59 pm

On Question, Whether the said amendment (No. 7) shall be agreed to?

Their Lordships divided: Contents, 60; Not-Contents, 139

Division No. 1


Addington, L.
Alton of Liverpool, L.
Avebury, L.
Barker, B.
Best, L.
Bledisloe, V.
Bonham-Carter of Yarnbury, B.
Borrie, L.
Bradshaw, L.
Chan, L.
Chidgey, L.
Craigavon, V.
Dholakia, L.
D'Souza, B.
Dykes, L.
Falkner of Margravine, B.
Garden, L.
Hamwee, B.
Harris of Richmond, B.
Holme of Cheltenham, L.
Hooson, L.
Howard of Rising, L.
Hylton, L.
Jones of Cheltenham, L.
Kirkwood of Kirkhope, L.
Lester of Herne Hill, L.
Linklater of Butterstone, B.
Listowel, E.
Livsey of Talgarth, L.
Maclennan of Rogart, L.
McNally, L.
Maddock, B.
Mar and Kellie, E.
Miller of Chilthorne Domer, B.
Murphy, B.
Neuberger, B.
Northover, B.
Palmer, L.
Phillips of Sudbury, L. [Teller]
Razzall, L.
Redesdale, L.
Rennard, L.
Roberts of Llandudno, L.
Rodgers of Quarry Bank, L.
Roper, L.
Russell-Johnston, L.
Scott of Needham Market, B.
Sharp of Guildford, B.
Shutt of Greetland, L. [Teller]
Smith of Clifton, L.
Swinfen, L.
Thomas of Walliswood, B.
Tonge, B.
Tordoff, L.
Turner of Camden, B.
Tyler, L.
Uddin, B.
Wallace of Saltaire, L.
Walmsley, B.
Warwick of Undercliffe, B.


Adams of Craigielea, B.
Adonis, L.
Ahmed, L.
Amos, B. [Lord President of the Council.]
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Bach, L.
Bassam of Brighton, L.
Berkeley, L.
Bernstein of Craigweil, L.
Bhattacharyya, L.
Bilston, L.
Bragg, L.
Brooke of Alverthorpe, L.
Brookman, L.
Burlison, L.
Carter, L.
Chandos, V.
Christopher, L.
Clark of Calton, B.
Clark of Windermere, L.
Clarke of Hampstead, L.
Cobbold, L.
Corbett of Castle Vale, L.
Corston, B.
Craig of Radley, L.
Crawley, B.
Cunningham of Felling, L.
Darcy de Knayth, B.
David, B.
Davies of Coity, L.
Davies of Oldham, L. [Teller]
Dean of Thornton-le-Fylde, B.
Desai, L.
Drayson, L.
Dubs, L.
Eatwell, L.
Elder, L.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Falconer of Thoroton, L. [Lord Chancellor.]
Falkender, B.
Farrington of Ribbleton, B.
Filkin, L.
Finlay of Llandaff, B.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Fyfe of Fairfield, L.
Gale, B.
Gavron, L.
Gibson of Market Rasen, B.
Giddens, L.
Golding, B.
Gordon of Strathblane, L.
Goudie, B.
Gould of Brookwood, L.
Gould of Potternewton, B.
Graham of Edmonton, L.
Grantchester, L.
Grocott, L. [Teller]
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haworth, L.
Hayman, B.
Henig, B.
Hogg of Cumbernauld, L.
Hollis of Heigham, B.
Howarth of Breckland, B.
Howarth of Newport, L.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Chesterton, L.
Hunt of Kings Heath, L.
Jones, L.
Jordan, L.
Judd, L.
King of West Bromwich, L.
Kinnock, L.
Kirkhill, L.
Lea of Crondall, L.
Lipsey, L.
McDonagh, B.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Mallalieu, B.
Massey of Darwen, B.
Merlyn-Rees, L.
Montgomery of Alamein, V.
Moonie, L.
Morgan of Drefelin, B.
Morgan of Huyton, B.
Morris of Aberavon, L.
Morris of Manchester, L.
Morris of Yardley, B.
Nicol, B.
Peston, L.
Quirk, L.
Ramsay of Cartvale, B.
Randall of St. Budeaux, L.
Rendell of Babergh, B.
Richard, L.
Rooker, L.
Rowlands, L.
Royall of Blaisdon, B.
Sainsbury of Turville, L.
Sawyer, L.
Sewel, L.
Sheldon, L.
Simon, V.
Snape, L.
Soley, L.
Stevens of Kirkwhelpington, L.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Temple-Morris, L.
Tenby, V.
Thornton, B.
Tomlinson, L.
Truscott, L.
Tunnicliffe, L.
Vinson, L.
Wall of New Barnet, B.
Walpole, L.
Warner, L.
Weatherill, L.
Wedderburn of Charlton, L.
Whitaker, B.
Wilkins, B.
Williams of Elvel, L.
Williamson of Horton, L.
Woolmer of Leeds, L.
Young of Hornsey, B.
Young of Norwood Green, L.

Resolved in the negative, and amendment disagreed to accordingly.

12 Oct 2005 : Column 321

Clause 5 [Special provisions about recreational charities, sports clubs, etc.]:

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