Lord Ponsonby of Shulbrede debates involving the Department for Digital, Culture, Media and Sport during the 2019 Parliament

Tue 14th Dec 2021

Charities Bill [HL]

Lord Ponsonby of Shulbrede Excerpts
Monday 10th January 2022

(5 months, 2 weeks ago)

Lords Chamber
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Baroness Barker Portrait Baroness Barker (LD)
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My Lords, I wish to add my name to the sentiments that have already been expressed. I particularly thank the many people, in different roles, who came together to bring this piece of legislation to our attention, after such a long time and a lot of work. This House prides itself on its detailed scrutiny of Bills, and this is the place in which a Bill such as this should have been given the attention that we gave it.

I regret that we did not manage to agree on the subject raised by the noble Lord, Lord Hodson of Astley Abbotts, which remains an outstanding piece of technical law and a very important point of charity law. It will have an impact on the Charity Commission, as the regulator of charities, to do its job. I do not imagine that that issue will come before Parliament for a very long time, but I hope that those who have followed our proceedings will not let it go.

Secondly, one other very small issue was drawn to our attention by one of our witnesses during our session: the operation by the Crown law officers and the Attorney-General of an alternative cy-près scheme. Legislation does not come much more obscure than that, but this is an issue that, on this occasion, we could not probe fully. I hope that that will happen when this goes to another place and, more importantly, that when the practitioners and people in the charity sector come to reflect on our work, as they will do in years to come, they will regard those two points as unfinished business. But, in the meantime, I thank everyone, including the Minister, for his patience with all of us—we lobbed some very difficult questions at him.

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, I echo the sentiments that have been expressed across the House. I particularly thank the noble and learned Lord, Lord Etherton, for chairing us so ably. I think that I am right in saying that all of us who participated in Committee had never done so for a Law Commission Bill before, so it was a learning experience for all of us. But the noble and learned Lord, Lord Etherton, is undoubtedly an expert—some would say a leading expert—in this field, and the whole House has benefited from his expertise.

From the experience of my wife, who works in the charitable sector, I know just how lengthy and wide the consultation has been on this Bill over many years. While there are some loose ends, as expressed by the noble Baroness, Lady Barker, this is nevertheless a piece of legislation that the whole House can be proud of. I hope that the impact of the Bill will remain in place for many years to come.

Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
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I am grateful to all the noble Lords for their comments. As the noble Baroness, Lady Barker, said, charity law can be very complex—not just for legislators but for the charities and organisations that it affects, especially those that do not regularly have access to legal advice. There is a duty on legislators to make the law as accessible as possible, while probing the issues that we have. I agree with the noble and learned Lord, Lord Etherton, that the expert advisers who gave evidence to the committee have helped us to do that and that the Bill has been improved because of the work of the committee and your Lordships’ House.

The Bill leaves this House in very good shape. As I say, it will make a big difference to those who run charities and the many great causes that they support. So, with renewed thanks to all involved and repeating the noble and learned Lord’s thanks to the clerk of the Special Public Bill Committee, Alasdair Love, I beg to move that the Bill do now pass.

Lord Parkinson of Whitley Bay Portrait The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
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My Lords, I rise to speak to Amendment 1 in my name. As this was a Law Commission Bill, scrutinised through the Special Public Bill process, I thank the noble Lords who sat on the Special Public Bill Committee which examined it, chaired ably by the noble and learned Lord, Lord Etherton. It consisted of my noble friends Lord Cruddas, Lord Bellingham, Baroness Fullbrook and Lord Sharpe of Epsom, the noble Lord, Lord Ponsonby of Shulbrede, and the noble Baronesses, Lady Goudie and Lady Barker, and was ably assisted by our clerk, Alasdair Love. I thank them and all those who gave evidence to the committee.



Amendment 1 responds to an amendment tabled by the noble and learned Lord, Lord Etherton, in Committee. I am grateful to him for his suggested amendment, and for the time that I have had to consider the policy behind it. The Government accept that the two thresholds in Clause 12—to vary the proportion of permanent endowment which may be borrowed, and the period over which such borrowing must be repaid—are of a different nature from the other financial thresholds contained in the Bill. Those other financial thresholds are concerned with monetary sums. They set the level at which it is appropriate for trustees to make their decision independently, or for the Charity Commission to oversee that decision. We maintain that in relation to the powers to vary those financial thresholds, and thus change where that balance is to be struck, the negative resolution procedure provides a proportionate level of parliamentary scrutiny.

However, Clause 12 does not indicate where regulatory intervention is required in the same way. It does not set out monetary sums. Instead, it places a percentage limit on how much a charity can borrow from its permanent endowment and specifies the period over which such borrowing must be repaid. Therefore, any variation of these thresholds has a slightly different implication. The financial thresholds elsewhere in the Bill can be adjusted to reflect changes in the value of money. By contrast, any amendment of the Clause 12 thresholds would not be about changes in the value of money.

We have carefully considered the various arguments regarding the right level of parliamentary scrutiny in relation to these powers, including the fifth report of the Delegated Powers and Regulatory Reform Committee of your Lordships’ House. We have been persuaded that it is appropriate for an additional level of parliamentary scrutiny to be put in place for any future changes made to the thresholds in Clause 12. Amendment 1 would therefore require any variation of the maximum proportion of permanent endowment from which a charity may borrow, and the period over which any such borrowing must be repaid, to be subject to the affirmative resolution procedure rather than the negative procedure. We consider that this amendment will help to maintain the balance between protecting donors’ funds and wishes and providing flexibility for trustees to make the best use of opportunities to fulfil their charitable purposes.

As a result of this change to Clause 12, it is also necessary to make consequential amendments to Clause 39 of the Bill. I will briefly explain these amendments. Amendment 1 inserts subsection (1)(d) into Section 348 of the Charities Act 2011 to confirm that any amendment to the delegated powers in Clause 12 is subject to the affirmative resolution procedure. Later in the Bill, Clause 39 makes other amendments to Section 348 of the Charities Act 2011. The Clause 12 amendment to Section 348 means that the wording in Clause 39 needs to be rearranged. Amendments 5, 6 and 7 are consequential amendments to change references to subsections in Section 348 to accommodate Amendment 1. I beg to move.

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, we support these government amendments. The Minister has explained them very clearly. I have nothing to add. He is just following up on recommendations in the fifth report of the Delegated Powers and Regulatory Reform Committee.

Amendment 1 agreed.
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Lord Thomas of Gresford Portrait Lord Thomas of Gresford (LD)
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My Lords, we on the Liberal Democrat Benches fully support this amendment in the name of the noble Lord, Lord Hodgson. When I heard the story of the Albert Hall that he outlined, there was only one thing I could say: “Land of Hope and Glory”. It seems to me that there is no justification for the way in which the Attorney-General acted in this case, without giving any proper reason. I did a bit of research to see what the published response of the Government was to the report of the Law Commission. No satisfactory reason for the need for the consent of the Attorney-General was given.

Because of the time, I will not delay your Lordships any longer, but it seems that the noble Lord, Lord Hodgson, should be congratulated, not only on this amendment but on all the work that he has done in this field and the report that he brought forward.

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, the view of the Labour Party, the official Opposition, is that we will abstain if this amendment is put to a Division.

I heard the speeches of the noble Lord, Lord Hodgson, at Second Reading, in Committee and on Report. He makes a very strong case, which he has made again today. As my noble friend Lord Rooker said, the traditional way that both Houses deal with Law Commission Bills is to essentially nod them through. That was, and is, the agreement between the usual channels regarding this Bill as well. However, the best that I can do for the noble Lord, Lord Hodgson, is to abstain, because there is merit in the underlying preceding agreement which the usual channels have had. That is the reason I take a different view from the noble Lord, Lord Thomas, who has expressed his support for the amendment.

We on these Benches will be abstaining. I will leave it to the Minister to make his own case.

Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
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I thank my noble friend Lord Hodgson of Astley Abbotts for tabling this amendment and for outlining the case again. Before I respond to it, I certainly associate myself with the comments of the noble Lord, Lord Thomas of Gresford, that my noble friend should be congratulated on all his work in this field. The Bill we are debating tonight is in very large part the result of his long-standing interest and considerable work in reviewing charity law.

On this issue, we have from the outset been at odds: where my noble friend sees obduracy, I see consistency. The noble Lord, Lord Rooker, is absolutely right: we can amend these Bills, even in the Law Commission procedure—we have just made some amendments in the previous group—but what is important is that we proceed on the basis of consensus and avoid areas of political disagreement. On this, the Government have been clear from the outset that we were not minded to accept the single recommendation from the Law Commission; and my noble friend has been equally consistent that he thought it was an important one. But we have made clear throughout the passage of the Bill our position on the role of the Attorney-General and the value placed on the Attorney-General’s oversight of references to the tribunal.

With respect to the noble Lord, Lord Rooker, and his advice that I take this away: I have taken it away and discussed it with the Attorney-General and her office on numerous occasions through the passage of the Bill so far, and I have had some helpful discussions with my noble friend, the noble and learned Lord, Lord Etherton, who is the chairman of the Special Public Bill Committee, and others, but our position remains as my noble friend Lord Hodgson knows it. Let me explain why that is.

Section 326 of the Charities Act 2011 provides the Attorney-General with the power to refer to the Charity Tribunal any question involving

“the operation of charity law in any respect, or … the application of charity law to a particular state of affairs.”

The Charity Commission has an equivalent power to make a reference to the tribunal where the question has arisen in connection with the exercise by the commission of any of its functions, but only with the consent of the Attorney-General under Section 325(3). These rights were considered by Parliament during the passage of the Charities Act 2006, which now appear in the consolidated 2011 Act, and it was agreed that this provision was necessary. The Attorney-General has an historic duty, on behalf of the Crown, to protect charitable interests in England and Wales. The Attorney-General’s consent for references to the charity tribunal is an important element in the system of checks and balances which should not be removed.

My noble friend says the Government have not made clear what specifically the Attorney-General’s role is. It is part of the Attorney-General’s role to assess whether a referral to the tribunal is in the interests of the public. This oversight also provides a second pair of eyes in ensuring that the costs associated with such a referral are not put on charities or on the public unnecessarily. So the Attorney-General works alongside the Charity Commission and provides a second opinion on referrals to the tribunal.

While this particular consent function is narrowly drawn, it is only one tool in a wider portfolio for performing her constitutional role as defender of charitable interests in the wider public interest. The Attorney-General’s wider role means that she has a unique perspective and is able to take into account considerations of societal issues and the wider repercussions for charities. In recent years, we have had Attorneys-General in both your Lordships’ House and another place. As such, the Attorney-General’s oversight reaches beyond charity law and regulation.

It should be remembered that the reference procedure is a unique declaratory power which enables the Charity Commission and the Attorney-General to seek rulings on what might be hypothetical questions. Outside this procedure, hypothetical questions are rarely entertained by the courts, for good reason. It is therefore right and proper that a public interest consideration is applied in the exercise of this unusual procedure. The value of the Attorney-General’s unique perspective has been recognised and commented on by the courts.

With this in mind, the Government oppose my noble friend’s Amendment 2, which would do away with the Attorney-General’s consent function altogether. We believe that by removing this mechanism completely, an important part of the Attorney-General’s oversight of charity law would be lost. So my noble friend will not be surprised to hear me say again that I am afraid we still disagree on this issue, as we did at the outset, and I would hope that he may yet withdraw his amendment.

It is important to note how rare these cases are. The Charity Commission and the Attorney-General have worked together on two references that the Attorney-General has made to the tribunal since the 2006 provisions were put in place, and there has been only one reference that the Charity Commission has sought the Attorney-General’s consent to pursue, which the Attorney-General, as my noble friend outlined, refused to give earlier this year. That is the context we find ourselves in for this debate.

Charities Bill [HL]

Lord Ponsonby of Shulbrede Excerpts
Thursday 18th November 2021

(7 months, 1 week ago)

Other Business
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I think the noble Lord, Lord Hodgson, has hit on an issue that we should discuss further in the Committee. At the moment, I think the Law Commission, perhaps on balance, has it right, but the problem that the noble Lord has highlighted is a very real issue for a very few organisations.
Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, I shall talk very briefly to this amendment. I agree with the noble Baroness, Lady Barker, that it is a privilege to be part of this technical Bill. It is one where I suspect that I, among other lay Members of this Committee, have learned a lot. I also thank the noble Lord, Lord Hodgson of Astley Abbotts, for introducing this amendment. He has explained a particular problem that is a big problem for a small number of charities. I understood that to be the problem that he outlined. The potential solution is not agreed between the Law Commission and certain specialist lawyers. Whether there is a way out of the problem through either dissolution or merger of the charity is something on which there is no overwhelming consensus.

I do not know what plans the noble Lord, Lord Hodgson, has for his amendment at either this or later stages of the Bill. I shall listen to the Minister’s response to the issues raised by the noble Lord and then take a view, depending on what he does at a later stage.

Lord Parkinson of Whitley Bay Portrait The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
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My Lords, before responding to this group of amendments, I first extend my best wishes to the noble and learned Lord, Lord Etherton, who has so ably chaired this Special Public Bill Committee so far. I hope he gets well soon and is back with us swiftly.

I thank my noble friend Lord Hodgson of Astley Abbotts for tabling Amendments 1 and 2 to Clause 3 and for the way he set out not just the amendments but, helpfully, the background to the Bill’s importance to charities and the people it will affect. Of course, he has long-standing interest and experience in this important area.

On my noble friend’s Amendment 1, which would insert a new subsection (2A) at line 9 on page 3 of the Bill, we consider that new Section 280A can be used to replace all the stated governing document in its entirety, with Charity Commission consent in respect of the particular provisions that fall within Section 280A(8). We do not think that a legislative solution is necessary and, as has been noted, this view is supported by the Law Commission and the Charity Commission—we have discussed the issue with both of them. I am grateful to my noble friend for raising this point, as it has prompted us to consider ways in which we can make the position clearer, but I hope that, on that basis, he will feel able to withdraw his Amendment 1.

On Amendment 2, which would insert subsection (9A) at line 14 on page 4 of the Bill, although my noble friend again makes an important point, we can in fact already achieve what the amendment sets out to do under the clause as it stands. Under the Bill, the Charity Commission’s consent is required for an amendment that would alter any unincorporated charity’s purposes. That is equivalent to one category of regulated alterations for charitable incorporated organisations, which requires the consent of the Charity Commission. By way of comparison, the Charity Commission currently treats amendments to the purposes of charitable incorporated organisations of the same type referred to in the amendment as not being a regulated alteration and therefore not requiring Charity Commission consent. Given the similarity between the statutory provision concerning charitable incorporated organisations and the new Section 280A(8)(a), the same approach would be taken in relation to changes to unincorporated charities’ purposes. Therefore, Section 280A(8) as it stands already looks at substance over form, and an amendment to a governing document would require Charity Commission consent only if it makes a substantive change, not if it is a pure drafting change. I hope that provides reassurance to noble Lords. As with the previous amendment, this is a view supported by the Charity Commission and the Law Commission.

However, I thank my noble friend for keeping us on our toes and for rightly probing this issue. Of course we want the situation to be clear to everybody who will be affected by the new law, so we will consider whether the Explanatory Notes could be expanded on this point to make that clearer. I hope that, on the basis of that reassurance—not the third of the options that my noble friend outlined in his opening speech but looking again at the Explanatory Notes to make this clear to all concerned—he will feel able not to press his Amendment 2.

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Moved by
3: Clause 12, page 13, line 37, at end insert—
“(4) No regulations under subsection (3) may be made unless a draft of the regulations has been laid before and approved by a resolution of each House of Parliament.”Member’s explanatory statement
This amendment, recommended by the Delegated Powers and Regulatory Reform Committee, would require the regulations under subsection (3) of section 285 of the Charities Act 2011 (inserted by Clause 12 (amount permitted to be borrowed from permanent endowment and time limit for re-payment)) to be made pursuant to the affirmative resolution procedure.
Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, the noble and learned Lord, Lord Etherton, has asked me to move his Amendment 3 and has provided me with speaking notes, which I will read out. I would like to send my best wishes to the noble and learned Lord and hope that he comes back to our proceedings as soon as possible.

Amendment 3, as set out in the brief explanatory note included in the Marshalled List, is in accordance with the recommendation of the Delegated Powers and Regulatory Reform Committee’s fifth report of Session 2021-22. Clause 12, which introduces new Sections 284A, 284B, 284C and 284D to the Charities Act 2011, creates a new statutory power for a charity to borrow a limited amount from the permanent endowment subject to repayment. Borrowing is limited to the permitted amount, as defined in Section 284B by reference to a formula in new Section 284B(1), and must be repaid within 20 years, as required under new Section 284A(2)(b), under the current provision in Clause 12(3) of the Bill.

Those two matters can be amended by regulations made pursuant to the negative resolution procedure. Clause 12(3) is one of five provisions in the Bill providing for regulations to be made by negative resolution where the appropriateness of the negative procedure has been questioned by the DPRRC. The DCMS response was that the powers are narrow in scope and use of the negative procedure merely follows the practice in the 2011 Act. There are three answers to that response. First, the fact that the negative resolution procedure is mostly used in the 2011 Act does not warrant the negative resolution in every case in the Bill. Secondly, there are provisions in the 2011 Act that stipulate the affirmative resolution procedure—see Sections 348 and 349. Thirdly, the regulations in Clause 12(3) are to be contrasted with regulations that are directed merely to changes in the value of money over time. As to that, the 20-year repayment stipulation is not a financial or threshold amount. No doubt it is for that reason that in his oral evidence Professor Hopkins of the Law Commission accepted that Clause 12 was not like other provisions in the Bill which provide for financial limits to be altered by regulation.

As to the calculation of the permitted amount, it is to be noted that the DPRRC said that greater weight should be given to the exceptional case of Henry VIII powers subject to the negative resolution procedure than to consistency with the existing approach in the 2011 Act; that in such cases provision for the negative resolution procedure to apply is to be treated as exceptional and requires a full justification to be given; and that, critically, unlike a power to amend the financial limit or threshold limit to uprating for inflation, the power in the Bill to amend the permitted amount that can be borrowed from the permanent endowment is not limited in any way and, in particular, is not limited to making changes to reflect changes in the value of money. I beg to move.

Lord Hodgson of Astley Abbotts Portrait Lord Hodgson of Astley Abbotts (Con)
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My Lords, I urge the Government and/or the Committee to accept this amendment and in doing so I, too, send my best wishes to the noble and learned Lord, Lord Etherton, for a speedy recovery. I am sorry he is not here to speak to his amendment.

The issue of permanent endowment is critical. It sounds highly technical, but it is critical because if you give a sum of money for the future, you may not wish your successors after you have died to spend it all. You may wish to have a permanent lump of money that will go on creating, looking after and fulfilling the public benefit you had in mind when you gave your funds in the first place. It is a key issue of a donor’s wishes as expressed in the way that the charity is set up. That is one problem.

The other half of the problem is that times change. The numbers get quite small because of inflation and the nature of the purposes to which you wish to put your money become outdated. We therefore need to find a way to balance this, but it is important because a person’s wishes as expressed in their will are a critical part of our society, so issues such as this require the affirmative resolution. Of course, we need to be able to change things to reflect inflation and so on, but it needs as high a level of scrutiny—of regulation—as we can offer. There are arguments about whether any level of secondary legislation scrutiny is good enough, but that is for another day. What is important is that we should have the highest possible level of scrutiny for this type of change that is available in the present regulatory structure.

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Moved by
4: Before Clause 36, insert the following new Clause—
“Consent for the taking of charity proceedings
In section 115 of the Charities Act 2011, after subsection (4)(b) insert —“, or(c) if, within 60 days of the receipt by the Commission of a request for consent, the Commission has neither granted nor refused consent, in which case consent will be deemed to have been given.””Member’s explanatory statement
This amendment specifies an exception to the prohibition in section 115 of the 2011 Act on taking charity proceedings without authorisation by the Charity Commission. The exception is where the Commission has failed to respond within 60 days to a request for consent, in which case consent will be deemed to have been given.
Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, similarly, I will be reading out the comments that the noble and learned Lord, Lord Etherton, has supplied me with on Amendment 4.

Section 115(5) of the 2011 Act provides that, if authorisation of the Charity Commission is required to take charity proceedings and it is refused, leave to take proceedings may be obtained from a judge of the Chancery Division of the High Court. There is a problem, however, with obtaining a timely decision of the Charity Commission one way or the other, as no application may be made to the Chancery Division for leave until the Charity Commission has made a decision to refuse authorisation. The result of delay by the Charity Commission in making a decision is that there may be a lengthy period of uncertainty and enforced inactivity.

This amendment addresses that problem by imposing on the Charity Commission a time limit of 60 days for refusal of authorisation. This is a typical time limit under the provisions of the 2011 Act, such as Sections 270 and 271 on a resolution to transfer all the property of a charity to take effect at the end of the period of 60 days, unless the Charity Commission notifies the charity before the expiry of the 60 days that it objects to the resolution, and Sections 277 and 278 on a resolution to modify the purposes of the charity to take effect at the end of the period of 60 days, unless the Charity Commission notifies the charity before the expiry of the 60 days that it objects to the resolution. Under Clause 11(3) of the Bill, where there is a resolution to spend the endowment fund of a charity under Section 282 of the 2011 Act, the commission is to state within 60 days whether it concurs with the resolution or not. If it fails to do so, the fund or relevant portion of it can be expended free of the restrictions that would otherwise apply. I beg to move.

Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
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I am grateful to the noble and learned Lord, Lord Etherton, for his proposed amendment and again to the noble Lord, Lord Ponsonby, for speaking to it. It is important that we consider both the concern that the amendment seeks to address and the practicalities of implementing such a suggestion.

We are not currently aware of any particular issue with the amount of time taken by the Charity Commission to respond to applications to pursue charity proceedings. There was mention during the evidence sessions which the committee has heard of some perceived delays at the Charity Commission, but I do not think they were in relation to decisions under Section 115. If an issue were raised in relation to the time taken by the Charity Commission for these considerations, that could be looked at without the need for legislation, for example by looking at internal processes.

By way of background, requests for Section 115 charity proceedings are rare. The Charity Commission’s consideration of such requests is often complex, being different from that of other requests of the Charity Commission, which tend to be more transactional in nature. Charity proceedings relate to the internal or domestic affairs of a charity. There are a number of considerations in relation to such requests that the Charity Commission must resolve, as set out in its guidance. The Charity Commission has therefore raised concerns about the appropriateness of a statutory timescale.

To illustrate one such complexity, these applications do not always result in either a grant or refusal of consent. In order to protect charitable funds, the Charity Commission tries to see whether there are routes the charity can take to avoid going to court. This has previously led to the charity resolving the issue itself, or the Charity Commission using its powers, such as by making an order or providing an action plan to resolve the issue.

The need for Charity Commission permission is intended to protect charitable funds and the courts from claims that have no reasonable prospects of success or which could be addressed more appropriately in other ways. It is also important for the Charity Commission to be satisfied that it is in the best interests of the charity that the matter be adjudicated on by the court. For the most part, these cases relate to internal disputes. While these issues can be complex and involve a lot of information, they also typically relate to one charity and therefore have a low impact on the sector as a whole.

The issue with having a timescale imposed on the Charity Commission for a decision of this nature, when no equivalent timescales are imposed for other Charity Commission decisions, also means that resolving these requests may become a higher priority for the commission than other higher-risk or higher-impact work. This would not be conducive to the Charity Commission’s role as a regulator of the sector when taken in the round.

If after a certain time cases were automatically to proceed to court without the consent of the Charity Commission, we would be concerned about the potential for court time and costs being spent on unnecessary or meritless claims. There is also the issue of cases where the Charity Commission has not received enough information to make a decision, which often happens with such requests, and further information or advice may also be sought by the commission following legal referrals. We are therefore apprehensive about the implementation of the 60-day time limit proposed and would invite the noble Lord to withdraw this amendment too, but we have heard the points of concern which have been raised and will of course reflect further on them.

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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I thank the Minister for responding to the points that I read out on behalf of the noble and learned Lord. The gist of his response, as far as I understood it, was that he was not aware of any particular issues, and internal processes could be adapted to meet this problem. I too have spoken to the noble and learned Lord, Lord Etherton, in the past couple of days. He said to me that he thought it was self-evident that there was a problem. He will no doubt read the Minister’s response with interest and the various reasons for which the Charity Commission is resisting this amendment. If more evidence is readily available, I am sure he will bring it to the Minister’s attention. In the meantime, I beg leave to withdraw the amendment.

Amendment 4 withdrawn.
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The wording I have used is that put forward by the Law Commission after extensive research and not my original recommendation in my review. This is a Law Commission Bill that we are discussing today and this is a Law Commission amendment, made by it after extensive legal, academic and sectoral consultation. I beg to move and, in doing so, I reserve my right to test the opinion of the Committee at the end, depending on what the Minister has to say.
Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, I shall speak to Amendment 6 in this group. Again, I shall read out the comments given to me by the noble and learned Lord, Lord Etherton. I may speak again at the end of the group, once I have heard the responses from other noble Lords in the Committee.

Amendment 6 is in consequence of the Government’s rejection of the Law Commission’s recommendation that the Charity Commission should not be required to obtain the Attorney-General’s consent before making a reference to the charity tribunal, as currently required by Section 325(2) of the 2011 Act. The Charity Commission and the Attorney-General should be required to give the other four weeks’ advance notice of any intended reference.

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I will echo a couple of points that have been made. Whatever procedure is followed to achieve some resolution in the case of the Royal Albert Hall, it is a much-loved and important cultural institution. Everyone wants it to thrive and prosper. Like many of our important institutions that have been around for a long time, whether they are a charity or not, it is incumbent on the people responsible for them to recognise when it is necessary to modernise to meet modern public expectations about the way those institutions operate. However, the Royal Albert Hall is a charity. As the noble Lord, Lord Hodgson, explained, the key issue that needs to be addressed is the fact that, although people are properly private property owners at the hall, the board of the charity is controlled by those people, who have a private interest in it and are profiting at the same time. That is exceptional in the context of a charity.
Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, I will respond to the question asked of me by the noble Baroness, Lady Stowell. From reading the Member’s explanatory statement, it seems that the objective of the amendment in the name of the noble and learned Lord, Lord Etherton, is to avoid the clock being reset every 60 days. Nevertheless, I will draw the noble Baroness’s question to the noble and learned Lord’s attention so that he can respond to her.

Baroness Stowell of Beeston Portrait Baroness Stowell of Beeston (Con)
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I am grateful to the noble Lord. Sorry, my point was this: what would happen if the Attorney-General responded during the 60-day period with an acknowledgement that the clock would not start again at that point? This is not about getting to the end of the 60 days but about continuing to restart the clock during those 60 days.

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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I thank the noble Baroness for that clarification. I understand her point: she does not want a “never-ending prevarication”, to use her words. I will draw her question to the attention of the noble and learned Lord, Lord Etherton, so that he can respond to her.

Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
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My Lords, I thank my noble friend Lord Hodgson of Astley Abbotts for tabling this amendment and the other noble Lords who put their names to it. As the Committee knows, when we responded to the Law Commission’s report in March the Government rejected the recommendation that the Charity Commission should be able to make a reference to the charity tribunal without first having to get consent from the Attorney-General.

Having noted the oral and written evidence taken by the Committee, we remain of the view that the Attorney-General’s consent function represents an important check in the system. As the noble Lord, Lord Ponsonby, noted, the evidence received by the Committee underlines the difference of opinion that exists among experts with regard to the Attorney-General’s consent requirement for references to the tribunal. This difference strengthened our conviction that the role of the Attorney-General as the constitutional protector of charities is important, and that this is a different role from the regulatory function of the Charity Commission. It is a mechanism that we feel must be protected.

I am grateful to my noble friend Lady Stowell of Beeston for her support for the Bill. Indeed, this is a Bill that she advocated during her time as chair of the Charity Commission. She is right to point to the excellent work it does in this important sector, but we see this mechanism as not an obstacle for the Charity Commission but rather a safeguard for it. The mechanism is already narrowly drawn, and a second opinion prior to the tribunal can help filter out claims that are not in the public interest before they burden the tribunal and, potentially, the charity in question if applicable to that case.

The Charity Commission may refer to the tribunal questions that have arisen in connection with the exercise of its functions which involve the operation of charity law or its application to a particular state of affairs. The requirement for the Attorney-General’s consent reinforces this approach.

The Charity Commission has an array of statutory functions, the vast majority of which it performs without the involvement of the Attorney-General. The two referrals that have been made to the tribunal followed close discussions between the Charity Commission and the Attorney-General, where both agreed that it was in the public interest to proceed. The Attorney-General’s consent function does not undermine the regulator’s role; rather, it supports and complements it by ensuring that referrals are made to the tribunal only where there is a clear public interest in doing so. That is why the Government cannot support the amendment and why I hope my noble friend will withdraw it.

I thank the noble and learned Lord, Lord Etherton, for his Amendment 6, which proposes a time limit of 60 days for the Attorney-General to make a decision on applications for references to the tribunal. Imposing a 60-day time limit on that decision to give or withhold consent is a suggestion that requires due consideration.

The perceived delay in the most recent case, on the Royal Albert Hall, was due to the particularly complex nature of that case, which can often be the nature of such references. The Royal Albert Hall case was a matter for the Charity Commission and the Attorney-General. The Government support the role of the Attorney-General in making references, given that the Attorney-General values the importance of charity and her role as protector of charities. I recognise the amount of time taken to reach a decision in that case, but it was a very complex issue, illustrated perhaps by the length at which my noble friend set it out. I am glad that the case has now been concluded, and the Attorney-General continues to be grateful for the excellent work the Charity Commission does in regulating charities in England and Wales.

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Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, briefly, I was grateful to the noble Lord, Lord Parkinson, for saying that he would consider Amendment 6. It is put forward as an alternative to Amendment 5. In the memorable words of the noble Lord, Lord Hodgson, it creates an elegant ladder down which the Government can climb. It is not a full-fat but a semi-skimmed ladder, if I can put it like that. I look forward to the results of the Minister’s consideration of the amendment, which I will not move.

Amendment 6 not moved.
Moved by
7: After Clause 36, insert the following new Clause—“Right of appealIn Schedule 6 to the Charities Act 2011 (appeals and applications to Tribunal), insert in the table the following new entries—

“Decision by the Commission under section 67A(4)(b) not to grant written consent.

The persons are-

(a) the charity trustees;

(b) any other person who is or may be affected by the decision.

Power to quash the decision and (if appropriate) remit the matter to the Commission.

Decision by the Commission under section 280A(7)(a) to give or refuse written consent.

The persons are-

(a) the charity trustees;

(b) any other person who is or may be affected by the decision.

Power to quash the decision and (if appropriate) remit the matter to the Commission.””

Member’s explanatory statementThese amendments are consequential on (1) Clause 7 of the Bill (cy-près application of proceeds of fund-raising), which requires under the new section 67A(4)(b) the Commission’s written consent if the money or property exceeds £1,000, and (2) Clause 3 of the Bill (amendment of trusts of an unincorporated charity) which requires under the new section 280A(7)(a) the written consent of the Commission to amendments to which section 280A(8) applies.
Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, in supplemental written evidence, Professor Nicholas Hopkins, the lead Law Commissioner on the Law Commission’s project on technical issues in charity law, pointed to the list of regulated alterations for unincorporated charities under the proposed new Section 280A(7) to the Charities Act 2011, which adds to the list of regulated alterations for companies in Section 198(2) and for CIOs in Section 226(2). CIOs are charitable incorporated organisations. The commission’s decisions under Sections 198 and 226 to give or withhold consent are appealable. The provision of a right of appeal, in respect of the giving or refusal of consent to a decision under new Section 280A(7), would therefore be entirely consistent with the policy of treating unincorporated charities in the same way as companies and charitable incorporated organisations.

Professor Hopkins went on to say, regarding new Section 67A, that a decision of the Charity Commission under the provision is essentially a specific type of new Section 280A resolution. Therefore, if there is provision for an appeal under new Section 280A, it would also be logical to provide an appeal to a decision under new Section 67A. I beg to move.

Baroness Stowell of Beeston Portrait Baroness Stowell of Beeston (Con)
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My Lords, I will speak briefly on this amendment. I am assuming I have understood it correctly—do not look at me like that, Lord Ponsonby! If I have, the amendment seeks to introduce a right of appeal to trustees, after they have arrived at a resolution on a decision. Under the proposals from the Law Commission, it requires that they go to the Charity Commission for formal approval or refusal. If I understand it, this amendment perpetuates the appeals process. That is in contrast to the Law Commission’s proposal, which is that, at the point that the approval is sought from the Charity Commission on a decision reached by the trustees, it is final. This introduces an extra level of appeal.

I offer a few thoughts on this because, quite often with smaller charities—we are talking about small amounts of money here—the underlying problem is a dispute between trustees. A lot of the commission’s time can be eaten up by disputes between trustees over quite small matters. The Law Commission was trying to remove that or force trustees, on these modest matters, to arrive at a decision on their own and take responsibility in the way they are required to and not, therefore, to allow an ongoing battle.

My fear is that if this appeal process is brought in, it would lend itself to those trustees who will never ever give up. That is why I caution against the amendment. I understand the intention behind it and it is of course well-intentioned, but it brings with it a burden that it might not have meant to. I counsel against it.

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Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, I recognise the concerns raised by the noble Baroness, Lady Stowell. In other parts of my life, I have seen the expensive problem of perpetual litigants for relatively small amounts of money and issues—I do not want to say “petty” issues, because they are not petty for the people concerned—that can go on for ever. Nevertheless, I am grateful to the Minister for agreeing to take this matter away. The noble Lord, Lord Bellingham, mentioned the length of time for appeals. The Minister has said that he will think about this some more, so I beg leave to withdraw the amendment.

Amendment 7 withdrawn.

Charities Bill [HL]

Lord Ponsonby of Shulbrede Excerpts
Wednesday 7th July 2021

(11 months, 3 weeks ago)

Grand Committee
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Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, I thank the Minister for introducing the Bill. This debate has demonstrated the great experience in this Committee. Before I get into my speech, I want to comment particularly on the two speeches by the noble Baronesses, Lady Fraser of Craigmaddie and Lady Greengross. The noble Baroness, Lady Fraser, is, I understand, the current serving chief executive of a charity, and the noble Baroness, Lady Greengross, was for many years chief executive of Age Concern. They both made different points, though similar in nature, about the detail of the rules. My wife was a charity CEO for 25 years, and I recognise the nature of those concerns and the detail of how you sort out the rules. It is the constant concern of CEOs, as I can attest, to make sure that the rules of charities are properly followed for the benefit of the interests of the organisation that they are running.

We in the Labour Party support this Bill. Charities are a force for good in our country. Millions of people regularly donate to them and support their primary objective: to help our fellow citizens. Some 170,000 charities in England and Wales are registered with the Charity Commission, with a combined annual income of around £74 billion. The purpose of this Bill is to address some of the nitty-gritty administrative issues that affect the running of charities. This will mean that more time and money can be spent on the charities’ primary purposes rather than burdensome administrative compliance. The Minister rightly made the point that this will be disproportionately beneficial to smaller charities.

From the Law Commission’s Eleventh Programme of Law Reform—including the initial review in 2012 by the noble Lord, Lord Hodgson—through to the most recent Law Commission reports, there has been extensive consultation and collaboration across the sector to arrive at today’s Bill. As the Library briefing states:

“The bill includes changes to simplify the law around … changes to a charity’s governing documents … payments to trustees in certain circumstances for goods and services … using funds for ex gratia payments or using funds obtained in connection to specific fundraising campaigns for other purposes … utilising permanent endowments; and disposals of charity land.”


The Law Commission’s recommendations were first published in 2017. The Government accepted most of the changes, many of which seemed technical in nature. However, as the briefing points out, the Law Commission highlighted a central point around

“the important balance between regulating charities and ensuring they have the freedom to act to the best of their abilities and in the public interest”.

At the all-Peers meeting kindly hosted by the Minister on 24 June, I made a point regarding responsible investments by charities that are in line with their purpose and values. I understand that two court cases exploring the definition of “responsible investment” are under way, and there is a draft guidance confirming that charities are free to adopt their own investment criteria. Since that date, I have received a helpful note from the Charity Commission confirming that it will put on hold the publication of its final guidance pending the outcome of those cases, that the law remains permissive in this area and that trustees can engage positively with responsible investment considerations should they choose to do so.

The noble Baroness, Lady Hayman, spoke to this point; my noble friend Lord Chandos challenged a number of the points that she made. I must say, this is an interesting debate that we will no doubt have again in future fora and future months, but I would be grateful if the Minister could confirm that this Bill will have no impact on the final guidance or the outcome of the court cases.

I have been fortunate enough to talk to two senior lawyers, Nicola Evans and Joe Coleman, who were intimately involved in the preparation of the Charity Law Association’s response to the consultation. They have given me some idea of the extent and breadth of the consultations undertaken. I raise two issues; they may be more suited to being raised in Committee, but I raise them here anyway. First, I understand that the Law Commission was not consulted on the extension of powers to stop the use of working names for a charity. This is a sensitive issue as it involves a clash of jurisdictions between intellectual property law, corporate law—as operated through Companies House—and the Charity Commission. I have heard that there is concern that this lack of consultation could lead to unforeseen circumstances. A second point that has been raised with me is on whether a surveyor’s report should be required when a charity sells land. It was felt that, given the huge range and size of charities, a single or simplistic rule would be inappropriate.

I understand that because of the nature of this Bill there are many detailed points and that some more contentious points are not part of this Bill. Nevertheless, I hope we can examine some of these detailed points as the Bill progresses through the special procedures for Law Commission Bills.

I highlight a couple of other points made by noble Lords during this debate. Both the noble Baroness, Lady Goudie, and the noble Lord, Lord Stevenson, raised the monitoring of borrowing by endowments. This is an important point and I would be interested to hear the Minister’s response on that.

I also thought that the idea that the noble Lord, Lord Naseby, had over breakfast this morning, of an equivalent of gift aid for the social care sector, was an interesting one, and I look forward to him developing that on future occasions.