Public Administration Committee Report (Charity Commission)

Peter Bone Excerpts

Thursday 6th June 2013 Commons Chamber

[Mr Jenkin]

I quite understand.

We received firm advice from the Attorney-General that we should treat the Preston Down case as sub judice to avoid prejudging any future tribunal decisions. In any case, it is not for PASC to determine the charitable status of individual cases.

The impact of the 2006 Act on the issue of public benefit and charitable status was at the centre of the inquiry. It has always been the case that charities must be established for charitable purposes only and that a charitable purpose must be “for the public benefit”, but the 2006 Act is said to have removed the presumption of public benefit from the list of headings that has historically existed, although case law prompts the question whether there ever was in fact such a presumption. However, the Act also placed a duty on the commission to publish guidance on public benefit, even though Parliament failed to define “public benefit” in the Act.

That aspect of the Act has been an administrative and financial disaster for the Charity Commission and for the charities involved, absorbing vast amounts of energy and commitment. Lord Hodgson describes the public benefit aspect of the Act as “a hospital pass”, inviting the commission to become involved in matters such as the charitable status of independent schools, which have long been a matter of political controversy.

We criticise the Charity Commission’s interpretation of the Act in some cases, but ultimately find that

“the Charities Act 2006 is critically flawed on the question of public benefit and should be revisited by Parliament”.

[Mr Peter Bone (Wellingborough) (Con)]

Will my hon. Friend give way on that point?

[Mr Jenkin]

I will give way to my hon. Friend when I am close to the end of my remarks.

We recommend that the presumption of public benefit in the 2006 Act should be repealed along with the Charity Commission’s statutory public benefit objective. The situation must be rectified with a new Act to allow the commission to focus on its proper job. Parliament, not the Charity Commission, should determine the criteria for charitable status and should not delegate them to an executive body.

We concluded that the other objectives for the Charity Commission set by the 2006 Act are also far too vague and aspirational in character—an all-too-frequent shortcoming of modern legislative drafting—to determine what the Charity Commission should do, given the limitations on its resources, to fulfil its statutory objectives.

--- Later in debate ---

[Mr Jenkin]

I am mindful of the hon. Gentleman’s point. We did not major on that during this inquiry, but it might be something to which we return. We recommend in our report that the Charity Commission and HMRC should work much more closely together. In fact, HMRC has the resource to investigate, penetrate and demand information about charities and their tax affairs and donors. In my personal opinion, it is as much a failure of HMRC as of the Charity Commission, but we recommend they work together more closely. What we have to be absolutely clear about is that the Charity Commission cannot start to conduct extensive investigations into the tax affairs of charities and their donors; it simply is not resourced to do so.

[Mr Bone]

I congratulate my hon. Friend and the Committee on producing such an excellent report—

[Paul Flynn]

You haven’t read it.

[Mr Bone]

There it is, Paul. I’ve read it—okay?

[Mr Sheerman]

We’ll test you on it.

[Mr Bone]

Madam Deputy Speaker, the suggestions being made from a sedentary position that I have not read the report are outrageous.

[Madam Deputy Speaker (Dawn Primarolo)]

Mr Bone, I quite agree. Mr Sheerman, Mr Flynn, you have made your contributions, and shouting across the Chamber is not helpful.

[Madam Deputy Speaker]

Well, the next time he shouts across the Chamber when I am in the Chair, I can assure you I will pick him up, as I do everyone. Mr Bone, you may continue.

[Mr Bone]

May I refer to a different aspect of the report, on charitable status for religious institutions? Many such institutions feel that there has been creep by the Charity Commission in defining public benefit or, worse still, going to the tribunal to define it. From what the Chair of the Committee is saying, I gather that he thinks this is something that Parliament should revisit.

[Mr Jenkin]

That is exactly right. The legal advice we received on this question is quite clear: in the 1949 case of Gilmour v. Coats, the House of Lords made it clear that a cloistered religious order is not charitable, as any benefit is restricted to its members, who are a private class and not a sufficient section of the public. It has never been the case that every religious organisation is automatically charitable. However, the judgments in two other cases—Neville Estates v. Madden in 1962 and Re Banfield in 1968—were that a private religious group that is not wholly shut off from the world at large may be charitable.

The 2006 Act was not intended to introduce anything new, and it may have introduced some instability by requiring the commission to think up guidance on public benefit. That is what we feel was the real mistake—the apparent removal of the presumption and the requirement to produce guidance. If Parliament wants public benefit to be defined, it should define public benefit or it should leave the matter to the courts. Making the Charity Commission use its intervening judgment is what Lord Hodgson of Astley Abbotts described as the hospital pass.

--- Later in debate ---

[Mr Jenkin]

I hear what the hon. Gentleman says and he made his views clear in the Committee. I just re-emphasise that we declined to express a view one way or the other on the merits of that case on the advice of the Attorney-General.

[Mr Bone]

My hon. Friend is being generous in giving way. The point I was trying to make is that there are religious organisations of all faiths that are concerned about what is happening and what might happen in the future.

[Mr Jenkin]

That is certainly correct. There has been widespread fear among many colleagues that the case presages a crackdown on religious groups by the Charity Commission. I believe the consistent message in our report is that we believe that too much has been laid at the door of the commission to determine. If Parliament wishes to legislate to provide additional restrictions against religious organisations, it is for Parliament to do that, but there is established case law, which I quoted earlier, that should determine whether or not a religious organisation becomes a charity. It is unfortunate that that particular case became so adversarial. It has to be said that the charity tribunal has not reduced the costs of litigation as was hoped, and there is scope to improve the practices of the commission in handling such disputes, so that vast amounts of the time and resources of the commission and charities, or potential charities, is not absorbed in paying lawyers to argue about how many angels there are on the head of a pin.