Charities Bill [HL]

My Lords, in Committee on 28 June, I undertook to study and to reflect very carefully on the contributions made by many noble Lords to the debate on that occasion and at previous stages. We have debated this on several occasions. Although we approached this in a fairly rigorous and open-minded way, our views remain the same as ever. That may be of some comfort to the noble Lord, Lord Hodgson. I want to go over our thinking on this because it is right for me to put it on the record. It is a matter of central importance to the Bill. The Charity Commission will be required to consult on and to issue guidance on the operation of the public benefit requirement. The requirement is that a purpose falling within the list of purposes in Clause 2(2) must be for the public benefit if it is to qualify as a charitable purpose. We all understand that; we have had that discussion on many occasions. It will, as now, be for the commission to apply the public benefit requirement in determining whether a particular organisation is a charity. There is, rightly, a great deal of interest in the commission’s proposed approach to its task of judging public benefit, and in the legal basis of the public benefit requirement. The commission has issued a publication, called Public Benefit—the Charity Commission’s Approach, to illustrate how it would be likely to approach the task of ensuring that charities meet the public benefit requirement. That publication also describes the legal basis for the commission’s task. The adequacy of the legal basis is very important, as it will enable the commission to carry out credible and effective checks on the public benefit of charities. We remain confident of the adequacy of that legal basis. The commission is clear in its publication that it will apply the general overarching principles derived from the legal basis to carry out public benefit checks. Those checks will be applicable both to new organisations applying to register as charities and to charities that already exist, and which may have been on the register since it started in 1960. The commission says that it will be able to carry out public benefit checks under the Bill as drafted. If the commission carries out a check that exposes an apparent lack of public benefit in a charity, one of two consequences could follow. First, if the charity is not delivering public benefit but is able to, the commission’s action might include helping the charity to change its stated purposes or its activities so that in future it is benefiting enough of the public to meet the public benefit requirement. The commission might also use its regulatory powers to enforce change if the trustees are failing to co-operate in introducing change themselves. The commission does not expect to have to resort to such action in more than a few cases. Secondly, in cases—these are likely to be pretty rare—where the trustees are co-operating with the commission but the charity simply cannot in all the circumstances provide public benefit, the commission’s action might include removing the charity from the register and making a legal scheme. The scheme would ensure that any charitable assets of the organisation were in the future applied for other charitable purposes close to any purposes that have ceased to be charitable—something we discussed earlier. That would happen only where it was not possible for an organisation to meet the public benefit requirement. I emphasise that the new purposes would be close to the original ones so that, for example, the assets of a charity whose original purposes were educational would be applied for new purposes which were educational. Those two sets of consequences will follow both in the case of fee-charging charities and in the case of charities that do not charge fees. The noble Lord, Lord Phillips, has described his amendment in the past—he has repeated this today—as a modest one and, in the best sense of the word, I agree. It is modest to the extent that we do not believe it would change anything. That is because, in setting out the legal principles by which it will apply the public benefit requirement, the Charity Commission says that it can already, and without the need for the amendment, take into account the effect of fee-charging on an organisation’s ability to meet the public benefit requirement. Our reflection over the summer has confirmed us in our belief that Part I as drafted will give charity law a proper foundation for many years in the future. It will also allow the commission to discriminate effectively in practice between organisations that provide a true public benefit and those that do not. In conclusion, I am drawn to the comments made by the noble Lord, Lord Hodgson. We have struck a balance. It has been arrived at through careful consideration of the issues. There has been consultation. The Charity Commission itself has undertaken very careful assessment and consultation with stakeholders in the past. The position that we have reached is reasonable and fair. The point raised by the amendment may already be taken into account by the commission if it believes it to be relevant, which no doubt it will.