Charities Bill [HL]

This is a very interesting amendment and I congratulate the noble Lord, Lord   Best, on tabling it. I think there is something in it and I shall say more about that towards the conclusion of my comments. The noble Lord, Lord Best, has explained the law preventing a person from being a trustee if he or she is under the age of majority, which at present is 18. This is achieved by specifying that the appointment of such a person is void. The rule applies to all trusts, private and charitable. It means that no attempt to appoint a person under 18 as a trustee of a charitable trust or a charitable unincorporated association has any legal validity. Any general change to this rule would have to be very carefully justified as being in the best interests of the beneficiaries of any trust. It is also difficult to see how the proposal could be effected, given the legal rules on the capacity of minors to make contracts, on which the noble Lord, Lord Phillips, made the killer point. The rule for directors of companies is different. That rule is relevant because about 15 per cent of all charities are set up in company form, rising to about 50 per cent among the largest charities. Under company law, there is at present no minimum age for a director. That allows charitable companies to appoint people under 18 as directors. However, I should draw your Lordships’ attention to the Company Law Reform White Paper published for consultation by my right honourable friend the Secretary of State for Trade and Industry in March of this year. The White Paper points out that it is for every company to ensure that it appoints as directors people who are not only capable of understanding their duties as company directors but who can also take full responsibility for their actions and omissions. The White Paper accordingly proposes that a statutory minimum age of 16 be introduced for company directors, which of course would include the directors of charitable companies. Subject to consideration of the responses to public consultation on the White Paper, which closed recently, provisions to establish 16 as the minimum age for directors will be included in the company law reform Bill that was mentioned in the Queen’s Speech in May. The duties of directors are different from the duties of trustees, and I should also point out that there is already a statutory minimum age of 18 for charity trustees of charities set up as industrial and provident societies or as friendly societies. This amendment would not affect such charities. Although the amendment of the noble Lord, Lord Best, would enable, say, 16 or 17 year-olds to become trustees, which might be appropriate in some circumstances, it would do away with any minimum age for a trustee of a charitable trust. While any general age limit is to some extent arbitrary, as understanding does not necessarily advance equally with years, the amendment would allow the appointment of a person who was too young to understand the duties of the office or to take responsibility for the consequences of his actions. That is what the proposed change to company law aims to prevent. As the noble Lord, Lord Phillips, said, there are also some legal issues to think about. One of them is that a minor cannot be the owner of any legal interest in land, with or without other people. Because a charitable trust has no legal personality, the trustees must be the legal owners of the charity’s land but they could not be if they were under 18. A second issue is that if a person under 18 is party to a contract, the contract generally cannot be enforced against that person. I think that any company or person with whom a charity wanted to do business would be very reluctant to enter into a contract with its trustees if they could not be compelled to meet their contractual obligations because they were under 18. A third issue is that there is no obvious legal reason why the age limit for a charitable trustee should be any different from that for a general trustee. A fourth issue is that the parents of a trustee under 18 could sometimes be liable for a breach of trust committed by that trustee. That would normally arise where the parent was directly implicated in the breach of trust, for example, because the parent had advised or encouraged the trustee to do, or not to do, the thing that constituted a breach of trust. For these reasons, the Government cannot accept the amendment in its present form. We agree, however, that it is desirable that children and young people should be able to influence the governance, policies and services of charities set up to cater for their needs. Many charities already achieve that by means other than having children and young people on their trustee boards, but it is worth noting that in October last year the Charity Commission for the first time registered a charity with people under 18 on its board. The noble Lord, Lord Best, has already made reference to the Welsh youth parliament, Funky Dragon, which is set up as a charitable company. Under its constitution, up to 50 per cent of its board members are allowed to be under 18, though, if the Government’s company law reform proposal that I mentioned earlier is enacted, those board members will have to be at least 16 years old. I suggest that there is something of real value in what the noble Lord, Lord Best, has proposed in his amendment. Over the Summer Recess we would like to give more consideration to the issues the amendment raises. I cannot give a hard and fast commitment that I will bring forward a government amendment on Report, but I do make a commitment to take serious account of the issues raised. Taking this period will enable us to take into account the results of the recently closed company law reform consultation, bearing in mind also that, because trustees of charitable trusts act personally rather than as agents of a corporation, the legal issues are potentially more complex and wide-ranging for trusts than for companies. We will also have to think about the position of trustees of the new CIO form created by the Bill. So there is an added complexity. I hope that my response does not sound unduly negative. It is not intended to be; it is intended to say,   ““Okay, there is a good idea here. We can see that. The Charity Commission has in a sense already acknowledged it through its registration of Funky Dragon. This is a cool concept. We will take it away and give it fair consideration and have more discussion with the noble Lord and others to see what we can achieve as a product of this””.