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Lord Swinfen: My Lords, the noble Lord, Lord Phillips, makes an interesting point because Clause 3(5)(c) of the 1993 Act refers to,

I liked what my noble friend Lord Hodgson said but I wonder if he would be prepared to combine it by bringing forward another amendment at Third Reading to bring in the capital assets of the charity. I can see that the capital assets of a charity need to be protected. I agree with that. I have never argued against that. Such a measure could help assuage the fears of the noble Lord, Lord Phillips. Otherwise, I support my noble friend's amendment.

9.15 pm

Lord Bassam of Brighton: My Lords, I am sympathetic to the noble Lord's amendment; I can certainly see its merits. I am reluctant to go over the ground that we have trodden on this matter before. However, it is worth reiterating that we have created flexibility here. The threshold can be altered by a statutory instrument—primary legislation will not be necessary. However, we believe that any change to the threshold should be introduced after proper and full consideration. We need to consult properly. We arrived at this figure as a fruit of consultation. It is accepted by the sector. The sector would probably want to have its feelings listened to if a change were contemplated. As the noble Lord will have anticipated, that rather forces me back on my point about our commitment to there being a review of all thresholds in the Bill a year after Royal Assent. A year is not too long a period. It will enable consultation to be carried out and fair consideration to be given to the matter. The point about protecting capital sums is an interesting and important one. Clearly, that may well feature in the review.

As I say, I have sympathy for the proposition but under the circumstances, and given that we have the flexibility we need to deal with this matter in the future, I must continue to resist the amendment.

Lord Hodgson of Astley Abbotts: My Lords, the Minister is as eloquent as ever. I wish to reply to the
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point made by the noble Lord, Lord Phillips. When I talk about systemic risk or threat to public confidence, I regard that as being posed by malfeasance on the part of a large national charity with which everyone is familiar and which receives substantial national publicity. I do not accept, and thoroughly deplore, malfeasance at any level on the part of any charity of whatever size. However, is one going to create a bureaucratic structure which will impose huge burdens on all charities and probably not catch anything much but just involve a lot of form filling and bureaucracy?

I accept the point that my noble friend Lord Swinfen made; it was entirely fair. However, I would like that matter to comprise a part of the review in 12 months' time. I would like the measure that we are discussing to be implemented now and for us to see how it fares. If my supposition is wrong and the noble Lord, Lord Phillips, is right and we introduce an asset test, my view is that after a year we will find that there have been absolutely no cases at all. However, that is just a guess. I wish to strike a blow for deregulation. I wish to test the opinion of the House.

9.19 pm

On Question, Whether the said amendment (No. 53) shall be agreed to?

Their Lordships divided: Contents, 19; Not-Contents, 45

Division No. 5


Cope of Berkeley, L. [Teller]
Craigavon, V.
De Mauley, L.
Dundee, E.
Fookes, B.
Hodgson of Astley Abbotts, L.
Kingsland, L.
Lyell, L.
Lyell of Markyate, L.
Mar, C.
Montrose, D.
Norton of Louth, L.
O'Cathain, B.
Rogan, L.
Seccombe, B. [Teller]
Selborne, E.
Swinfen, L.
Waddington, L.
Williamson of Horton, L.


Adams of Craigielea, B.
Andrews, B.
Bach, L.
Bassam of Brighton, L.
Best, L.
Bilston, L.
Blackstone, B.
Brooke of Alverthorpe, L.
Clark of Calton, B.
Clark of Windermere, L.
Crawley, B.
Davies of Oldham, L. [Teller]
Desai, L.
Drayson, L.
Dubs, L.
Farrington of Ribbleton, B.
Foulkes of Cumnock, L.
Gibson of Market Rasen, B.
Giddens, L.
Gould of Brookwood, L.
Grocott, L. [Teller]
Haworth, L.
Henig, B.
Hollis of Heigham, B.
Howarth of Newport, L.
Hoyle, L.
Hunt of Kings Heath, L.
Jones, L.
Judd, L.
Kennedy of The Shaws, B.
Lea of Crondall, L.
McDonagh, B.
McKenzie of Luton, L.
Maxton, L.
Morgan of Drefelin, B.
O'Neill of Clackmannan, L.
Prosser, B.
Rendell of Babergh, B.
Rooker, L.
Rowlands, L.
Royall of Blaisdon, B.
Simon, V.
Snape, L.
Tunnicliffe, L.
Young of Norwood Green, L.

Resolved in the negative, and amendment disagreed to accordingly.

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Clause 18 [Cy-près schemes]:

Lord Phillips of Sudbury moved Amendment No. 54:

The noble Lord said: My Lords, Amendment No. 54 is innocuous. It calls on the Government to drop the words "social and economic" from a part of the cy-près scheme arrangements of Clause 18. Put simply, the wording is relevant to the matters that the High Court or the Charity Commission must take into account when making a cy-près scheme. They include the spirit of the original gift, the desirability of securing that the property is applied for charitable purposes and the wording to be amended,

All one need say, and should say, is "suitable and effective in the light of current circumstances". The phrase "social and economic" is redundant, and confines the circumstances that can be considered in the making of a scheme. It id cramping, because there are many circumstances that are neither social nor economic. Why on earth should the court or the commission be confined to considering suitability in the light of current circumstances? It is a simple point, and I cannot see any answer to it, but that is not to say the noble Lord, Lord Bassam, will not attempt to find one. I beg to move.

Lord Hodgson of Astley Abbotts: My Lords, my name is to this amendment, but, having taken up some of the House's time over the last one, I will just say I agree with every word the noble Lord, Lord Phillips, has said, and I hope the Government will accept it.

Lord Swinfen: My Lords, surely the words that the Government have included in the Bill are otiose, because "social and economic" would be included in "circumstances".

Lord Bassam of Brighton: My Lords, we do not agree. We are entitled to disagree. This version of the Bill took account of our earlier debates in March by amending the clause so the commission would have regard to the need for a charity to have purposes that were suitable and effective in the light of current social and economic circumstances. Previously the requirement would have been to have regard to the need for the charity to be able to make "significant social or economic impact".

This is not the biggest issue we have had to consider, but it is important that we have some context in which to root the way in which these issues are considered. "Social and economic" is fine. I could think of words to add, and can see that there may be other things that could be put in there, but the phrase is a fair catch-all.
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I do not agree with the noble Lord, Lord Phillips, that it is restrictive and narrowing, which is certainly not the intention of the Government.

We think this flexibility goes far enough in allowing charities to develop in response to social and economic changes in society, and to provide for the needs of those who, by virtue of their financial position, can benefit most from charitable activity. The amendment proposed by the noble Lord extends this further by making unlimited this limb of the matters to which the commission must have regard, rather than constrained in this context. We do not want to do that.

Our view is that, when using these provisions, the courts and the commission must have a greater focus on what is important; that is, the social and economic circumstances in which charities operate. There may well be circumstances wider than social and economic that could influence a decision, such as the effect of lobbying from particular interest groups in the locality including political groups, which it would not be appropriate to take into account. We believe the circumstances must be clearly defined, and an emphasis on society and on economic needs is the right limitation to adopt.

This clause also reflects the provisions of the earlier Clause 15, which defines when it is appropriate to make a change of this sort, rather than what the change should be. We would like to maintain this similarity and consistency of approach.

The amendment goes too far. We have something that is flexible enough, and can be operated in a way that excludes things that may be undesirable. "Social and economic" seems to me to be commonly understood, and makes a lot of sense. We continue to resist the amendment.

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