Cities and Local Government
Devolution Bill [HL]; Psychoactive Substances Bill [HL]; Charities
(Protection and Social Investment) Bill [HL]|
1. This report draws to the attention of the
House a number of matters arising from three bills: the Cities
and Local Government Devolution Bill [HL]; the Psychoactive Substances
Bill [HL]; and the Charities (Protection and Social Investment)
Bill [HL]. Our comments on each bill are dealt with separately
2. There is one general matter that we wish to
draw to the attention of the House. In all three bills, the first
to be introduced in the House in this Parliament, we see the continuation
of a trend that was evident during the last Parliamenta
tendency towards the introduction of vaguely worded legislation
that leaves much to the discretion of ministers. This is apparent
in the broad discretion given to the Secretary of State to implement
the Cities and Local Government Devolution Bill [HL], and in the
vague language in the Psychoactive Substances Bill [HL] and the
Charities (Protection and Social Investment) Bill [HL] which raises
concerns about legal certainty and the precise scope of powers
being afforded to the Secretary of State to make changes through
3. We recognise that primary legislation cannot
anticipate every eventuality, or be able to set in stone every
detail. Secondary legislation and judicial interpretation will
continue to be required on occasion to implement primary legislation.
Nonetheless, the House may wish to be mindful of this trend as
further legislation is introduced during this Parliament, and
to ensure that bills contain an appropriate level of detail and
provide a suitable degree of legal certainty. We will continue
to draw the attention of the House to this issue in future.
Cities and Local Government
Devolution Bill [HL]
4. The Cities and Local Government Devolution
Bill [HL] was introduced in the House of Lords on 28 May 2015
and received its second reading on 8 June. Its Committee stage
is scheduled for 22 and 24 June.
5. The Bill takes forward the Government's plans
for more powers for cities and regions, creating the opportunity
for a 'combined authority' and directly elected mayor to be created
for areas which seek these powers. This initiative flows from
the commitment made in the Conservative Party manifesto to "devolve
powers and budgets to boost local growth in England" and
to "devolve far-reaching powers over economic development,
transport and social care to large cities which choose to have
6. The Bill is, in a sense, enabling legislation
since it provides the outline of a legislative framework which
can then be applied flexibly to different areas by secondary legislation.
It sets out the institutional framework for further changes and
the process by which these might be brought about and new bodies
created. It does not seek to set out in detail what the substance
of these changes might be or the powers that might be conferred.
Most of the provisions in the Bill are amendments to the Local
Democracy, Economic Development and Construction Act 2009.
7. To summarise the Bill's key purposes, it allows
for secondary legislation to:
for an elected mayor for the combined authority's area who would
exercise specified functions individually and chair the authority;
for the possibility for the mayor additionally to undertake the
functions of Police and Crime Commissioner for the combined authority
area (in place of the Police and Crime Commissioner);
where a mayor is to have Police and Crime Commissioner functions,
Police and Crime Commissioner elections that would otherwise have
taken place and allow the existing Police and Crime Commissioner's
term of office to be extended until the mayor is in place;
the current statutory limitation on functions that can be conferred
on a combined authority (currently economic development, regeneration,
and transport); and
for streamlined local governance as agreed by councils.
8. Since much of the bill enables the Government
to devolve powers as necessary through secondary legislation,
wide discretionary powers are to be given to the Secretary of
State to bring about what could be a very extensive devolution
of power in England. This differs significantly from the devolution
processes for Scotland, Wales and Northern Ireland in 1997-98,
where the statutes clearly identified the recipients of devolved
authority, the matters devolved, and the limitations upon those
powers. It is not unusual to vest the Secretary of State
with wide discretionary powers in the area of local government,
but in this case the Secretary of State has wide powers effectively
to reorganise the whole system of local government in England.
9. Although broad delegated powers are evident
in clause 1 (relating to the process of mayoral elections and
the length of office terms to be served), and clause 10 (as regards
local authority structures, boundaries, and governance), this
discretion is particularly evident in clauses 5 and 6.
10. Clause 5 empowers the Secretary of
State, by order, to confer on any combined authority a broad set
of functions going beyond economic development, regeneration and
transport (which can already be devolved under the Local Democracy,
Economic Development and Construction Act 2009). This can be done
if the authorities concerned undertake a review and publish a
scheme, or if the Secretary of State considers that the order
is appropriate and the authorities provide consent.
11. Clause 6 confers a broad power on the Secretary
of State by order to transfer functions from a public authority
that are exercisable in relation to a combined authority's area
to that combined authority. There is also a power to transfer
property, rights and liabilities from a public authority to the
combined authority and to abolish the public authority if it will
no longer have any functions. This clause provides for the transfer
of potentially very extensive powers. Notably, however, such a
transfer can only take place if a "proposal for the making
of the order in relation to the combined authority has been made
to the Secretary of State by the appropriate authorities",
which means the local authorities in question; or in the case
of an existing combined authority, if the combined authority consents.
And the ultimate decision is for the Secretary of State who must
consider that "the making of the order is likely to improve
the exercise of statutory functions in the area or areas to which
the order relates".
12. Clauses 5 and 6 are broadly framed and
would allow the Secretary of State to reallocate very extensive
powers from central government to local government, transfer powers
within local government, and to abolish public authorities, by
order. This equates to a significant extension of Ministers' powerspowers
which are so broadly framed that they could potentially involve
the amendment of primary legislation by order, known as Henry
13. It is not clear to which cities and regions
these reforms will apply since the changes will, in general, be
brought forward on the basis of proposals from the cities and
regions themselves. It is widely thought that the reforms will
apply primarily to England's largest city-regions (the Core Cities
Group), but the Bill
is drawn in more general terms and could potentially apply to
a single county if all the councils in the area agree.
14. One result is that local government in England
is likely to become more complicated, as different combined authorities
receive different packages of powers. This is a significant
departure from past practice which has operated on the basis of
a finite number of different council models. The Bill, by contrast,
creates the possibility of bespoke arrangements for each combined
authority. It might be argued that the proposed system is a paradigm
example of demand-and-supply devolution, responsive to local needs.
On the other hand there are real concerns about the complexity
of the system that may result, and the degree of asymmetry which
these changes may bring about. In particular, there is a potential
for a significant divergence between urban and rural local government
15. Although these proposals are the development
of an on-going process started in the Local Democracy, Economic
Development and Construction Act 2009, we note that they are being
taken forward very quickly. There has been no green paper, white
paper or draft bill for pre-legislative scrutiny.
16. We bring these other matters to the attention
of the House.
17. The Psychoactive Substances Bill [HL] was
introduced in the House of Lords on 28 May 2015. It received its
second reading on 9 June. Its committee stage is scheduled to
begin on 23 June.
18. The Bill is intended to address issues relating
to substances that cause 'legal highs': that is, substances that
are similar in chemical composition and/or effect to controlled
drugs under the Misuse of Drugs Act 1971, but which have not been
so designated. In the light of concern about increasing numbers
of deaths associated with the use of such substances, the Home
Office established an Expert Panel to consider possible legislative
ways forward. It recommended an approach that is broadly in line
with that which is now found in the Bill.
That approach is premised on the notion that substance-by-substance
specification is impractical (on account of the rapid proliferation
of similar but subtly distinct psychoactive substances)
and that general prohibition of certain activities in respect
of all such substances is to be preferred, subject to certain
19. The central premise of the Bill is that,
subject to two types of qualification, certain activities in respect
of psychoactive substances should constitute criminal offences,
the qualifications being:
certain substances that would otherwise count as psychoactive
substances should not so count by virtue of their being exempted
certain acts in respect of psychoactive substances should not
constitute criminal offences on account of their being excepted
20. A "psychoactive substance" is defined
in clause 2 as "any substance" that is "capable
of producing a psychoactive effect in a person who consumes it"
and is not an "exempted substance". A substance produces
a psychoactive effect "if, by stimulating or depressing the
person's central nervous system, it affects the person's mental
functioning or emotional state".
21. The Bill inevitably exists in tension (at
least to some extent) with the principle of legal certainty since
its raison d'être is the regulation of activities
in respect of substances that may not currently exist and whose
nature and composition cannot readily be prescribed in advance
with any accuracy. However, it does not follow that a Bill designed
in this way need make unacceptably broad inroads into the principle
of legal certainty, since much turns upon the clarity with which
its prima facie sweeping proscriptive reach is qualified.
It is against that background that the exempted-substances and
excepted-acts regimes fall to be considered.
22. An otherwise-psychoactive substance will
not count as such for the purpose of the Bill ifand only
ifit is an exempted substance listed in schedule 1.
Exempted substances include: controlled drugs;
certain medicinal products; alcohol; nicotine; tobacco products;
caffeine; food and drink.
23. Most of the definitions in schedule 1 are
relatively clear. However, some are not. For example, to count
as "food" or "drink", the substance must be
ordinarily consumed as food or drink and must not contain a prohibited
ingredient. However, the boundary delineating things that are
and are not "ordinarily consumed" is not without difficulty.
Meanwhile the circumstances in which food will be free from "prohibited
ingredients" is not wholly clear, a prohibited ingredient
being defined as "any psychoactive substance which is (a)
not naturally occurring in the substance, and (b) the use of which
in or on food is not authorised by an EU instrument". It
is also worth noting that the relationship between some exemptions
is not clear. For instance, "caffeine products" are
an exempted substance to which no qualification relating to "prohibited
ingredients" applies, yet many such products will also be
"drinks" to which that qualification does apply.
24. Given that schedule 1 is central to the
ambit of the new criminal offences created by the Bill, the House
may wish to consider whether the drafting of this part of schedule
1 is sufficiently clear, and whether it offers sufficient legal
Ministerial authority in respect of exempted substances
25. Clause 3 confers upon the Secretary of State
certain powers in respect of what counts as an exempted substance.
Some features of this scheme diminish any scope for concern from
a constitutional perspective: the affirmative procedure applies;
there is a duty to consult prior to exercising the power; and,
while the Secretary of State can both add and remove substances
from the list of exempted substances, the removal power applies
only to substances that were, in the first place, added by the
Secretary of State. It is not, therefore, open to the Secretary
of State by regulations to remove substances mentioned in the
original version of schedule 1 ("originally scheduled substances").
There are, however, two further aspects of the scheme that should
26. First, although the Secretary of State may
not remove from schedule 1 originally scheduled substances, the
Secretary of State is authorised to "vary" the
description of "any" substance, including originally
scheduled substances. This presumably means that the Secretary
of State could narrow the definition of such substances,
thereby expanding the range of psychoactive substances
upon which the Bill bites.
27. The House may wish to consider whether
the safeguards mentioned in paragraph 25 are sufficient to
offset the concerns that arise in relation to authorising the
Secretary of State to expand the range of substances which fall
subject to the Bill by "varying" the definitions of
originally scheduled substances. Alternatively, if the power to
"vary" is not regarded as objectionable per se,
a clearer definition of what "varying" means in this
context may be appropriate.
28. Second, the powers of the Secretary of State
to add substances to, remove substances from and vary the description
of substances in schedule 1 are unconstrained by any explicit
statement of the purpose or purposes for which that power may
be exercised. Any constraints upon the purposes for which the
powers could be used would therefore have to be inferred from
the scheme of the Bill. However, the scope for inferring purpose-based
limits upon the Secretary of State's power is likely to be limited,
since the Bill adopts an ostensibly neutral conception of what
should constitute a (non-exempted) psychoactive substance: for
instance, no notion of "harm" is (explicitly) invoked
anywhere in the Bill so as to delineate the range of substances
upon which its provisions have effect.
29. The House may wish to consider whether
it is appropriate to confer upon the Secretary of State a power
to amend schedule 1 that is unconstrained by any textual indication
as to the purpose or purposes for which the power may be used.
30. Even if a psychoactive substance is not exempted,
criminal liability will be avoided if the commission of an act
that would otherwise constitute an offence under the Bill is an
excepted act. However,
the Bill makes no provision as to what an excepted act might be.
Instead, clause 10 authorises the Secretary of State to specify
excepted acts by making regulations. Such regulations may only
be made if a duty to consult is first discharged, must be made
by statutory instrument, and are subject to the affirmative procedure.
However, those safeguards notwithstanding, there are two potential
grounds for concern.
31. First, as with the exempted-substances regime,
the provision authorising the Secretary of State to specify excepted
acts is expressed in very broad terms. In particular, no textual
indication is given as to the purpose or purposes for which the
power to specify excepted acts may be exercised. The House
may wish to consider whether it is appropriate to confer such
a broad power on the Secretary of State, and in particular whether
it should be unconstrained by any textual indication as to the
purpose or purposes for which it may be exercised.
32. Second, there is a fundamental difference
between the exempted-substances and excepted-acts regimes. The
(initial) details of the former are written into the Bill, by
virtue of schedule 1 itself and the conferral upon the Secretary
of State of only limited powers to alter that schedule.
In contrast, the details of the excepted-acts regime are wholly
absent from the Bill. Whether any such regime is in fact established
and, if so, on what terms are instead matters that are wholly
for the Secretary of State to determine. This point is compounded
by the facts that (as noted above) the breadth of that discretion
is substantial and the manner in which the discretion is exercised
may significantly affect the range of conduct that is criminalised
by the Bill. The House may wish to consider whether it is appropriate
to leave the details of the excepted-acts regime to be determined
wholly through secondary legislation.
and Social Investment Bill) [HL]
33. The Charities (Protection and Social Investment)
Bill [HL] was introduced in the House of Lords on 28 May 2015
and had its second reading on 10 June. The Committee stage is
scheduled to commence on 23 June.
34. The Bill was introduced in the light of concerns
about the Charity Commission's capacity to operate as an effective
regulator, with particular respect to its ability to investigate
and deal with allegations of serious financial irregularities
and fraud. Such concerns were highlighted by Lord Hodgson
of Astley Abbotts in his review of the operation of the Charities
Act 2006. Further
post-legislative scrutiny of the 2006 Act was conducted by the
House of Commons Public Administration Select Committee, which
concluded that if the Commission were to become a "proactive
regulator", legislation would be needed in order to "clarify"
its powers. In 2013
the Public Accounts Committee concluded that the Commission was
an ineffective, reactive regulator.
The National Audit Office issued reports that were similarly critical.
35. In 2013, the Government consulted on proposed
changes to the Charity Commission's regulatory powers,
following which a draft Protection of Charities Bill was published.
The draft Bill was scrutinised by a Joint Committee of the Houses
of Parliament; its report was largely supportive of the draft
36. The Bill extends to England and Wales only.
It amends and inserts new provisions into the Charities Act 2011,
which is now the principal piece of legislation in this area.
The Bill gives the Charity Commission powers to issue "official
warnings"; alters its powers to remove trustees, including
by allowing it to persist with a trustee-removal process (thereby
securing the trustee's disqualification) even if the trustee resigns;
authorises the Commission to direct the winding up of a charity;
extends the circumstances in which a person is automatically disqualified
from being a trustee; treats disqualified trustees as also being
disqualified from performing senior management roles in the charity;
and authorises the Commission to issue disqualification orders
in respect of trustees who are not automatically disqualified.
The Bill also clarifies that charities can make "social investments".
HENRY VIII POWERS
37. Two clauses in the Bill contain Henry VIII
powers. Clause 9 inserts a new provision, section 178A, into the
Charities Act 2011, setting out those offences conviction for
which triggers automatic disqualification. Clause 9 also allows
the Minister, by regulations, to amend section 178A by adding
or removing offences. Clause 10, meanwhile, provides that disqualification
orders may be issued only if (among other things) one of six specified
conditions is met, and permits the Minister by regulations to
add or remove specified conditions. Regulations made under both
clauses 9 and 10 would be subject to the affirmative procedure.
38. While the conferral of Henry VIII powers
for the purpose of amending the lists of specific criminal offences
(in clause 9) and conditions (in clause 10) is justifiable, the
House may wish to consider whether these powers are framed inappropriately
broadly. Clause 9 simply provides that the Minister is permitted
"to add or remove an offence" from the list set out
in new section 178A. There are, however, no criteria stipulated
in the Bill that would constrain the scope of that discretion
by (for instance) specifying that only certain types of
offences, or only offences of certain levels of seriousness,
may be added. It does not follow that the discretion is limitless.
It is, for instance, bounded by the administrative-law principle
that statutory powers must be used consistently with the purpose
of the Act. However, such implicit constraints are a poor substitute
for explicit ones.
39. A similar point arises in relation to the
regulation-making power in clause 10, which baldly states that
the Minister may "add or remove" a condition from the
list of conditions that must be satisfied before the Commission's
power to issue disqualification orders is triggered. In its memorandum
to the Joint Committee on the Draft Protection of Charities Bill,
the House of Lords Delegated Powers and Regulatory Reform Committee
expressed concern about this matter.
It noted that the power "seems very wide" in the absence
of any requirement that new conditions should be limited to conduct
which could have a bearing upon a person's fitness to be a trustee.
40. In correspondence with the Joint Committee
on the Draft Protection of Charities Bill, the Joint Committee
on Human Rights (JCHR) expressed concern about certain aspects
of the drafting of the draft Bill. The JCHR noted that, as a result,
"broad and coercive powers" were conferred upon the
In particular, attention was drawn to the following matters.
41. A new section 76A would be inserted into
the Charities Act 2011 by clause 3 of the Bill. At present, the
2011 Act authorises the Commission to take significant regulatory
action provided that
a relevant trigger condition is satisfied. One such condition
is that the Commission is "satisfied" that "there
is or has been any misconduct or mismanagement in the administration
of the charity". The effect of new section 76A is that, in
cases in which the Commission is also satisfied that such mismanagement
is attributable (in whole or part) to a particular person, the
Commission may, when deciding whether or how to exercise its powers,
take account of "any other conduct that appears to the Commission
to be damaging or likely to be damaging to public trust and confidence
in charities generally or particular charities or classes of charity".
This formulation captures a very wide and ill-defined range of
conduct, given that: (a) damage need only be "likely";
(b) the requirement of (likely) damage is adjectivally unqualified
by any requirement as to seriousness; (c) the notion of "public
trust and confidence" is undefined and relatively open-ended;
(d) the conduct in question need not be in relation to any charity.
42. Clause 10 of the Bill would insert into the
Charities Act 2011 a new section 181A authorising the Commission
by order to disqualify a trustee. Such action would be likely
to have substantial personal, financial and/or reputation repercussions
for the individual concerned; as such, it represents a significant
coercive power. The power is exercisable provided that the Commission
is satisfied that (a) the trustee is unfit for such a role, (b)
disqualification is in the public interest in order to protect
public trust and confidence, and (c) one of seven further conditions
is met. One of those further conditions is that "past or
continuing conduct by the person, whether or not in relation to
a charity, is damaging or likely to be damaging to public trust
and confidence in charities generally or in the charities or classes
of charity specified or described in the order". This formulation
raises concerns similar to those referred to in paragraph 41.
43. In a number of contexts, the Bill relies
upon the notion of someone being "privy to" misconduct
or mismanagement in determining whether, and if so how, the Charity
Commission's coercive powers may be exercised.
Being "privy to" mismanagement or misconduct is an alternative
to being "responsible for" or having "contributed
to" or "facilitated" mismanagement or misconduct.
As such, the notion of being "privy to", unless redundant,
must mean something other (and broader) than facilitation, contribution
or responsibility. The Joint Committee on the Draft Protection
of Charities Bill recommended that the phrase "privy to"
should be excised from the Bill (and from the Charities Act 2011
in which it also appears)
on the ground of its vagueness.
44. As noted above, the JCHR, in correspondence
submitted to the Joint Committee on the Draft Protection of Charities
Bill, expressed concern about the breadth of the powers conferred
upon the Commission as a result of the provisions referred to
in paragraphs 41-43 above. The JCHR said:
"In the absence of further definition in
the Bill itself, or other guidance, such broad and vague language
significantly increases the power of the Commission and provides
insufficient certainty to both individual trustees and charities
about the possible consequences of their conduct in relation to
matters which may have nothing to do with the management or administration
of a charity."
45. The concerns identified by the JCHR from
a human-rights perspective are mirrored by corresponding constitutional
concerns on the grounds of legal certainty. We draw these concerns
to the attention of the House.
1 Conservative Party Manifesto 2015, p.13: https://www.conservatives.com/manifesto
[accessed 19 June 2015] Back
Explanatory Notes to the Cities and Local Government Devolution Bill [HL]
[HL Bill 1(2015-160-EN], para
Comprising Birmingham, Bristol, Cardiff, Glasgow, Leeds, Liverpool,
Manchester, Newcastle, Nottingham and Sheffield. Back
The Committee has made recommendations about appropriate levels
of pre-legislative scrutiny in its report The Process of Constitutional Change
(15th Report, Session 2010-12, HL Paper 177). Back
Home Office, New Psychoactive Substances Review. Report of
the Expert Panel (September 2014): https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/368583/NPSexpertReviewPanelReport.pdf
[accessed 19 June 2015] Back
Approximately 500 psychoactive substances have been designated
under the Misuse of Drugs Act 1971: New Psychoactive Substances
Review., p 17. The 1971 Act was amended by the Police Reform and Social Responsibility Act 2011
so as to introduce a supplementary regime for the temporary (one-year)
designation of substances, so as to enable proscription pending
the relatively lengthy process of permanent designation under
the 1971 Act. Back
Clause 2(1)(b). Back
Clauses 4(2), 5(4), 7(2) and 8(5). Back
Clause 3(1). Back
If a substance is a controlled drug under the Misuse of Drugs
Act 1971, it cannot be a psychoactive substance. The two regimes
are thus wholly distinct; substances cannot fall within the purview
of both. Back
Clauses 4(2), 5(4), 7(2) and 8(5). Examples of uses to which
the excepted-acts regime might be put include allowing "those
who are conducting or supporting legitimate research into psychoactive
substances to do so by excluding specified research activity from
the ambit of the offences" and enabling "healthcare
professionals (and those in the distribution chain) when acting
in their professional capacity [to supply] to a patient a psychoactive
substance which falls outside the exemption list": Explanatory Notes to the Psychoactive Substances Bill [HL]
[HL Bill 2 (2015-16)-EN], para 78. Back
The Secretary of State has powers to vary and add to schedule
1, but not to remove substances from it. Back
Such a review was required by section 73 of the Charities Act
2006. Cabinet Office, Trusted and Independent: Giving Charity
back to Charities. Review of the Charities Act 2006 (July
[accessed 19 June 2015] Back
Public Administration Select Committee, The role of the Charity Commission and "public benefit": Post- legislative scrutiny of the Charities Act 2006
(Third Report, Session 2012-13, HC 76), para 25 Back
Public Accounts Committee, The Charity Commission (Forty Second
Report, Session 2013-14, HC 792), summary. Back
National Audit Office, The Cup Trust, HC 814, (December
[accessed 19 June 2015]; and The regulatory effectiveness of
the Charity Commission, HC 813, (December 2013): http://www.nao.org.uk/wp-content/uploads/2013/11/10297-001-Charity-Commission-Book.pdf
[accessed 19 June 2015] Back
Cabinet Office, Consultation on extending the Charity Commission's
powers to tackle abuse in charities, (4 December 2013): https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/263248/
[accessed 19 June 2015] Back
Draft Protection of Charities Bill, Cm 8954, October 2014 Back
Joint Committee on the Draft Protection of Charities Bill, Draft Protection of Charities Bill
(Report, Session 2014-15, HL 108, HC 813) Back
That is, investments that are made with a view to both directly
furthering the charity's purposes and achieving a financial return
for the charity. Back
This would be effected by means of amending section 348 of the Charities Act 2011.
Joint Committee, Draft Protection of Charities Bill, appendix
Ibid, appendix 4 Back
Including suspending trustees, offices and employees, appointing
additional trustees, vesting a charity's property in the official
custodian, restricting transactions in respect of a charity's
property, and appointing an interim manager. Back
Charities Act 2011, new section 76A(2)(a) (to be inserted by
clause 3); new section 79(4)(a) (to be inserted by clause 4);
new section 181A(7)D and E (to be inserted by clause 10). Back
Charities Act 2011, sections 79(2)(a)(i) and 178(1) Back
Joint Committee, Draft Protection of Charities Bill, paras 122-125
Ibid, para 123 Back