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Lord Peyton of Yeovil had given notice of his intention to move Amendment No. 5:

The noble Lord said: My Lords, with this amendment, I had in mind a police constable—not necessarily a man of gigantic intellect—being confronted first with the legislation and having to puzzle out its meaning, forming a clear conclusion that an offence had been committed or was likely to be committed and then arresting someone without a warrant. That seemed to me a most improper and undesirable procedure and very dangerous for the police constable. In the circumstances, I hope that the Minister will reflect on what I have said.

[Amendment No. 5 not moved.]

[Amendment No. 6 not moved.]
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Charities Bill [HL]

6.25 pm

Baroness Scotland of Asthal: My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Charities Bill, have consented to place their Prerogative and Interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

I beg to move that this Bill be now read a third time.

Moved, That the Bill be read a third time.—(Baroness Scotland of Asthal.)

Lord Bassam of Brighton: My Lords, it might be helpful before we get into the detailed consideration of the Bill to make a short statement on the vote that was held on 12 October on Report. Your Lordships will recall that the House voted into the Bill an amendment moved by the noble Lord, Lord Phillips, which removed the control of the Minister for the Civil Service over the terms and conditions of the staff of the new Charity Commission, substituting a provision that would allow the commission to determine the remuneration of its staff subject to an overall remuneration budget agreed with the Treasury. The amended provision is now paragraph 5(3) to a new Schedule 1A to the Charities Act 1993, which appears at line 41 on page 80 of the Bill.

The Government have since had time to reflect and explore the effects and implications of that amendment. My understanding is that a significant effect of it may well be to remove from the Home Civil Service the staff of the new commission, with the exception of the chief executive, over whose terms and conditions ministerial control survives. That must in turn call into question the status of the commission under the amended Bill as a non-ministerial department. It was and remains the Government's intention that the staff of the new commission should be in the Home Civil Service, as the staff of the present charity commissioners are. I do not believe that the noble Lord, Lord Phillips, intended by his amendment to remove the staff of the new Charity Commission from the Home Civil Service. Accordingly, the Government will consider what steps they can take in another place to ensure that the commission staff will continue to be in the Home Civil Service from the moment when the provisions converting the existing commissioners to the new commission take effect.

(9)I thank the House for bearing with me while I made that statement, but I thought it only right and proper, given that it was an amendment from your Lordships' House, that I explained the situation and some of the difficulties that it has created. I am prepared simply to say that those noble Lords who are involved in the debate are welcome to join, perhaps with myself or the Bill's Minister and officials, to discuss and reach a deeper understanding of the implications of the amendment. It is probably best left at that.

Lord Phillips of Sudbury: My Lords, I am grateful to the Minister for alerting the House to the problems
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that he explained. They bear a little thinking about, and I cannot confess to having taken in the whole plot at one hearing, but I am grateful that he has offered talks to see how nearly we can get to the amendment passed by the House on a vote, assuming that there is some other way of getting nearer to the wishes of the House. We look forward to those talks.

On Question, Bill read a third time.

Clause 3 [The "public benefit" test]:

Lord Campbell-Savours moved Amendment No. 1:

"( ) In determining whether an independent school meets the public benefit test under this section, the Charity Commission shall have regard to any directions or guidance issued by the Secretary of State."

The noble Lord said: My Lords, in moving Amendment No. 1, I shall speak also to Amendment No. 6, which stands in my name.

The amendments cover what in my view is the most controversial part of the Bill—that is to say, the charitable status of fee-paying schools.

Lord Swinfen: My Lords, the noble Lord said that he would speak also to Amendment No. 6, which is my amendment. Does he mean Amendment No. 5?

Lord Campbell-Savours: My Lords, I apologise, I did mean Amendment No. 5.

I apologise for returning to this issue on Third Reading, but since we last considered these matters the Government have produced their education White Paper, which in my view has changed the climate in which this debate takes place.

The problem at heart is that the Government believe that the public schools—including, for example, Eton and Harrow—are charities. I ask myself, "Who in the Government believes this nonsense?". In my 40 years' membership of the Labour Party, I have never heard it argued that Eton is a charity. The public do not believe it, and neither do Labour MPs, as they will inevitably express in a few weeks when the Bill hits the House of Commons.

The charitable status of public schools brings charity law into disrepute. The fee-paying schools desperately cling on to that status for the tax benefits. It is perfectly reasonable for public schools to have tax benefits because they reduce the pressure on public expenditure, but charity status is the wrong vehicle to use to provide those benefits. If the fee-paying schools want tax benefits, they should come under separate provisions in the Finance Act in return for providing public benefit. We should just take them out of the area of charity law. The Bill does not do that, though; it leaves it to the Charity Commission to decide their public benefit contribution.

A Charity Commission that has left Eton, Harrow and other public schools as charities over the years has a question mark hanging over it. Indeed, during consideration in the Joint Committee, I asked around in the charitable sector why it was that the commission, in the view of some, was so timid. I did
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not like the reply, but I will put it to the House. I was told that it was because the commission's management was riddled with people who have interests in private education for their own children, and they do not want to rock the boat.

The truth is that I do not trust the judgment of the Charity Commission. They will duck the hard decisions on private education that are required, which brings me to my amendments. They are both about the need for political, parliamentary influence to be exerted on commission decisions in relation to fee-paying schools. Amendment No. 5 draws on the work of the Nathan committee, which made recommendations in 1950 about the future of charities. It recommended that the Charity Commission and the education Minister share responsibility for the charitable status of fee-paying schools, the reason being that the charitable, voluntary and endowed schools and the technically non-charitable LEA-maintained schools were part of the same national system. That position was written into the Charities Act 1960. As a result, until 1973, the Secretary of State for Education was charity commissioner for educational charities, and shared responsibility for those schools with the Charity Commission.

In 1973, the government changed the law and removed that provision—primarily, many believe, in order to emphasise that there should be two separate school systems: one of fee-paying education out of the reach of government for some, and a free education under government supervision for the others. In retrospect, that was a significantly deliberate political Act of Parliament. In 1974, a change of government took place, and a Select Committee of the Commons unanimously recommended that fee-paying schools should retain their charitable status only if they could prove public benefit. That then became my party's policy.

Today the Nathan principle is as compelling as it was in 1950 and 1960, and it is against that background that the Government, like their 19th-century predecessors, are seeking to create in their White Paper the concept of a national system of education that is more intact. I remind the House that, during the 19th century, governments of both parties assumed that fee-paying schools were part of the state system, and many committees and commissions were set up to keep a state system for education intact.

Only yesterday the Times reported that a fee-paying charitable school in Liverpool was to become a maintained non-fee-paying school—a healthy development. That school has decided to become part of the non-fee-paying state system. In the circumstances of the new policy, it is absurd that the Charity Commission, which has little educational expertise, should, with the courts as a longstop, be effectively the only arbiter of the place of new maintained schools in the state system.

(5)Nathan was absolutely right: whatever the status of schools, the Secretary of State responsible for the national system of education should be given reasonable purchase on the shape, framework and operation of a new developing state system. My
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amendment would restore the shared responsibility between government and the Charity Commission that existed before 1973. I believe that my argument in this regard is compelling, and if your Lordships do not recognise that, I hope that the Commons does when it comes to consider these matters.

Amendment No. 1 concerns the height of the public benefit hurdle that fee-paying schools will be compelled to surmount if they wish to maintain their charitable status. The issue has been well rehearsed in previous stages, and I do not want to go down that route. The Government's brief, for which my noble friend is required to argue, has been unconvincing. It is an immensely political issue, and one that dominates debates on education in our party. Many obvious and genuine charities resent their charitable status being entangled by the Government with that of Eton, Harrow and the other fee-paying schools.

The proposition that this criterion should simply be left to a quango—the Charity Commission—and the courts, bodies whose individual members cannot be considered disinterested parties in the light of their personal commitment to private education, is offensive. Decisions about the nature of public benefit should be enshrined in statute by Parliament, particularly by the elected House of Commons. If the latter amendment does not appeal to your Lordships, I hope that the Commons will see the sense of it. I beg to move.

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