Charities (Pre-consolidation Amendments) Order 2011

Lord Phillips of Sudbury Excerpts

Wednesday 27th April 2011 Grand Committee

[Baroness Verma]

My Lords, the draft order before us today is a technical order that makes minor amendments to charity law. It will be made in preparation for the consolidation of charity legislation via the Charities Bill 2011, which was introduced to this House on 3 March.

The aim of this order is merely to tidy up some minor points in the existing legislation before charities legislation is consolidated. It might help if I first give a little background to the Charities Bill itself before explaining the purpose of this order. The purpose of the Charities Bill is: to bring together provisions of the main legislation on charities in England and Wales into a single piece of legislation; to simplify the structure of the existing legislation, making it more accessible to the lay person; and to replace provisions in the Recreational Charities Act 1958, the Charities Acts 1993 and relevant provisions of the Charities Act 2006.

Due to the fragmentation of charity legislation, it has become increasingly difficult to navigate the law in this area, not least as the Charities Act 2006 made extensive amendments to the Charities Act 1993. The Bill will fulfil a commitment given during the passage of the Charities Act 2006 in response to noble Lords who requested that charity legislation should be consolidated to make it easier to follow, particularly for non-expert charity trustees. The Law Commission, which is responsible for consolidation Bills, responded favourably to a request from the Cabinet Office, and the result is the Charities Bill, which was introduced last month.

Neither the order nor the Bill itself makes any substantive changes to charity law. The types of amendments that the order makes fall into the following categories: correcting minor mistakes in the existing legislation or remedying missed consequential amendments; removing inconsistencies in the existing legislation; modernising the language of the existing legislation; repealing provisions in the existing legislation that are now considered obsolete; clarifying the effect of the existing legislation; and consequential provisions relating to other provisions of this order.

I will give a couple of examples to assist the Committee. One example of correcting a minor mistake is in paragraph 4 of the schedule to the order relating to the Charities Act 1993, which provided that,

“In the exercise of its functions the commission shall not be subject to the direction or control of any Minister of the Crown or other government department”.

The use of the words “or other” in this context gives the impression that a Minister of the Crown is a government department. Clearly this is not the case, as while a Minister of the Crown may be in charge of a government department, he or she is not a department per se. The amendment in this order avoids this misinterpretation while retaining the allusion to the fact that the Charity Commission is a government department.

Paragraph 31 deals with various inconsistencies relating to rights of appeal to the Charity Tribunal. For example, a right of appeal exists where the Charity Commission requires a charity’s accounts to be audited, but does not currently exist for certain charity group accounts. The amendment in paragraph 31(g) removes that inconsistency.

An example of how the language used has been updated is in paragraph 7 of the schedule, which now uses the word “provide” instead of the original word “furnish”, as in providing documents instead of furnishing them. Paragraph 15 of the schedule removes an obsolete reference to the Incorporated Society of Valuers and Auctioneers, which merged with the Royal Institution of Chartered Surveyors in January 2000.

An example of how the order clarifies legislation is contained in paragraph 18 of the schedule. In the context of a section that refers to both the Audit Commission and the Charity Commission, the reference to “the Commission” is changed to the “Charity Commission” to avoid any potential confusion. The structure of the legislation has also been improved to make it easier to follow. However, this has led to the need for some pre-consolidation amendments. For example, paragraph 11 of the schedule facilitates the splitting of Section 18 of the 1993 Act into a number of separate sections in the consolidation Bill. Section 18, which provides the Charity Commission with various powers to act for the protection of charities, is long and complex, so splitting it up should make the text easier to navigate.

The order also makes consequential amendments, in particular changing various cross-references, that will result from splitting up Section 18. The draft order was consulted on in 2009 as part of the wider consultation on the draft Charities Bill, and we received positive responses. I hope noble Lords will agree that the order is a useful tool for clearing up some outstanding issues in charity law before the Charities Bill completes its passage through Parliament. There will be a review of the Charities Act 2006, starting later this year. This will provide an opportunity to look again at the legal framework for charities in England and Wales, and to consider whether the policies that lie behind the legislation are working in practice.

As a consolidation Bill, the Charities Bill represents a small but useful step forward in simplifying the legislative framework for charities and supports the Government’s aim of making it easier to set up and run a charity, as it will make charity law more accessible to the lay charity trustee. We have a window of opportunity to tidy up what has become a confusing and messy legislative landscape, and it would be a shame to lose this chance. This order will pave the way for the consolidation of charity law. I beg to move.

[Lord Phillips of Sudbury]

My Lords, I thank my noble friend the Minister for the way in which she gave a tour d’horizon of this statutory instrument. As she rightly says, this is a prelude to the consolidation Bill, which starts in this House next Thursday, although I do not think that anyone will be there—I notice that the Commons is not sitting on that day.

A very important aspect of the debates on the Charities Bill that led to the Charities Act 2006 was that we were to have a consolidation measure. I was, I think, foremost in urging that and in getting the Government to put it into the Bill so that we could be quite sure that it would happen. As my noble friend again so rightly says, the danger with our efforts here is that, while they might be just about comprehensible to the specialist lawyer, the Charity Commission, the parliamentary draftsmen and the civil servants involved, they are a closed book to everyone else. Given that 95 per cent of our charities have no paid staff, and that all trustees are volunteers, it is a very serious predicament. Although the consolidation measure is more than 300 pages, it will go some little way to making life a tad easier for those who are doing the job on the ground.

I should like to refer to two aspects of this statutory instrument. Noble Lords may agree that there can be few pieces of legislation more sleep inducing than the Charities (Pre-consolidation Amendments) Order 2011. Indeed, so arcane is most of the language that you have to be a bit of an egg-head to plunge into its depths.

[Lord Davies of Oldham]

Oh!

[Lord Phillips of Sudbury]

I beg the noble Lord’s pardon. I thought that the noble Lord, Lord Davies, had uttered a witticism.

[Lord Davies of Oldham]

My Lords, I was merely expressing approval of the fact that it is the noble Lord who is displaying his egg-head qualities.

[Lord Phillips of Sudbury]

I should like the Minister to give a little explanation of paragraph 10 of the schedule to the order, and I have given her notice of that. The paragraph goes to the heart of the relationship between this order, the consolidation Bill and the Houses of Parliament. To be frank, try as I did, I could not perfectly understand where things were left by paragraph 10. My understanding is that, if in Section 17(2) of the 2006 Act the Minister is given the power to make an order, it is superfluous then to go on to say,

“and a draft of the order shall be laid before Parliament”.

That follows. However, I became a little lost with the omissions and additions later in paragraph 10, and if the Minister is able to cast enlightenment on that I shall be most grateful.

My only other point is more substantial and concerns paragraph 24 of the schedule to the order, which relates to Section 79(2) of the 1993 Act. This is an important provision in the Act. At the start, paragraph 24 says that in Section 79(2) the word “ratepayers” is to be omitted. This provision is designed to ensure that parochial charities have a governing body or a group of trustees that is fit for purpose in the 21st century. Section 79(2) of the 1993 Act, as amended by the 2006 Act, says that the Charity Commission may allow the appointment of trustees to parochial charities in the circumstances described in Section 79(2). Paragraph 24(1) says that “ratepayers” shall be deleted from the description of those persons who shall have power in future to appoint trustees, or at least it does not eliminate their powers to appoint but it affects the right of the commission to make an order appointing additional charity trustees. My problem with paragraph 24—and I read it many times—is that sub-paragraph (2) seems to be wholly superfluous. It says:

“Nothing in sub-paragraph (1) affects any appointment of a charity trustee made before the commencement of that sub-paragraph”—

that is, before the consolidation Act comes into effect. As I said, that is wholly superfluous because one cannot make retrospective legislation other than in rare circumstances and with the greatest possible clarity and want of ambiguity. That is my first point.