Academies Bill [HL]

Lord Hodgson of Astley Abbotts Excerpts

Wednesday 7th July 2010 Lords Chamber

Moved by

[Lord Hodgson of Astley Abbotts]

40: Clause 8, page 6, line 14, leave out “is a charity” and insert “may be deemed to be an exempt charity if and in so far as it is a charity”

[Lord Hodgson of Astley Abbotts]

My Lords, this is a technical but important amendment that is causing some interest and concern in the charitable sector because of the implications for the authority of the Charity Commission. We had a very interesting debate on this matter in Committee on 28 June, when my noble friend the Minister was kind enough to suggest that I should withdraw the amendment so that some conversations could take place behind the green baize door. I am pleased to be able to say that we have had those conversations. Some interesting points were made by his officials, to which I shall respond in a minute. No definite conclusions were reached, however, so I have re-tabled Amendment 40 in the hope that the Minister will be able tonight to accept its purpose.

Just to set the issue in context, I remind the House that my original argument was as follows. The Charities Act 2006 created a delicate balance, reconciling the many and diverse views about charitable activities. It did so by removing the presumption under the 1601 Act that the advance of religion, relief of poverty and advance of education were automatically charitable. It was agreed that this was no longer appropriate. Instead of this, we were to have a single public benefit test, to be applied to all charities at inception and thereafter. It put the creation, administration and enforcement of the public benefit test in the hands of a single independent regulator, insulated from any political pressure: the Charity Commission. Thus, a level playing field was established across all charities.

Nowhere was this more important than in the field of education, because education has fee-paying schools and there are strong views about whether they can or should be able to have charitable status. I argued that the Bill as presently drafted upsets that balance, undermines the independence of the Charity Commission and, most importantly, creates a dangerous precedent of government and ministerial interference in the charitable sector. That was the argument.

The arguments of the Minister’s officials can be summarised as follows. First, the wording of the type used in Clause 8(1) has been used before and therefore changing it is not only unnecessary but creates a dangerous precedent. As a matter of principle, I find that an unsatisfactory response. Carried to its extreme, it is an argument for never changing anything and for complete bureaucratic inertia. If the drafting of a statute is defective, we should put it right and not argue that it is too difficult to change it subsequently. But I have a number of substantive arguments as opposed to that one of principle and issues about the way the Minister’s officials have sought to reinforce their position.

The first is that any precedents that are drafted before 2006 are irrelevant because they predate the ending of presumption: they assume presumption and therefore are irrelevant. Only those statutes that have come into effect post-2006 are relevant. There is only one such that the Bill team was able to produce and that was in the Apprenticeships, Skills, Children and Learning Act 2009, so I went searching. In Schedule 8 (33M), I found:

““A sixth form college corporation is a charity within the meaning of the Charities Act 1993”.

That is quite different wording from what we have here. The Bill states:

“A qualifying Academy proprietor is a charity”,

not,

“a charity within the meaning of the Charities Act 1993”.

I am not enough of a lawyer to be able to weigh the significance of the additional words, but it indicates that sixth form colleges are much more closely tied to the remit of the Charity Commission and therefore reduced the risk of undermining the authority of that commission. Certainly, nothing in the 2009 Act envisaged the creation of a whole new class of exempt charities with their own regulator as Clause 8 does in subsection(4).

Further, the nature of the arrangements in the Apprenticeships, Skills, Children and Learning Act are quite different from those envisaged in this Academies Bill. Inter alia, the former Act did not envisage the degree of independence for sixth form colleges as for schools under this Academies Bill. If noble Lords look at the Model Funding Agreement which the Minister has been kind enough to circulate, in many cases they will see a degree of independence that means that the charitable status of the academy is much more important. The Minister himself in his letter of 1 July that he kindly circulated to us says that:

“These different processes are necessary because of the contractual nature of our relationship with the Academies”.

Therefore, the Bill team is wrong to try to argue that there are a series of precedents out there that make this amendment unnecessary.

The second argument that the Bill team brought forward was to quote from my speech in Committee on 28 June when I said I was sure that academies would be able to pass the public benefit test. Why, then, they argued should I be concerned about the wording? I absolutely agree that it is likely that the academies will pass the charitable test, but that is not the same as believing that they should not be able to fail. I can envisage circumstances in which academies could fail a public benefit test. Indeed, the many debates that we have had tonight and in Committee have raised pinch points where that could happen. I hope that it does not, but it could. That is why we need to be very clear about charitable status.

To conclude, my amendment is designed to bring absolute clarity to the charitable status of academies by preserving beyond peradventure the delicate balance achieved in the Charities Act 2006—no ifs, no buts, no maybes and, above all, no requirement to pay expensive lawyers for interpretation of clauses the meaning of which is not absolutely clear. Along the way, this amendment has two further side benefits: we buttress the independence and authority of the Charity Commission as the regulator of the sector and, last but not least, we avoid creating a precedent of governmental interference in a sector that is heartily to be avoided. I beg to move.

--- Later in debate ---

[Lord Hodgson of Astley Abbotts]

If the YPLA is the exempt regulator, does my noble friend expect it to have a public benefit test which it will apply to the schools, and will that be the same public benefit test as the Charity Commission applies to other schools?

[Lord Hill of Oareford]

We think that a state-funded school which becomes an academy would be deemed to have passed the public benefit test. However, if I am wrong about that, I will write to my noble friend and put myself straight.

I know that my answer will not have provided satisfaction to my noble friend Lord Hodgson, and that I have only part met some of the concerns raised by my noble friend Lord Phillips. However, given the answers that I have provided, I hope that they will feel able at this hour not to press their amendments.

[Lord Hodgson of Astley Abbotts]

My Lords, I am grateful to the Minister for his lengthy research and work and for the answers that he has given me, though I have to say they are slightly uncompromising in tone. However, it is obviously far too late to explore this matter further tonight. I beg leave to withdraw the amendment.

Amendment 40 withdrawn.