Charities Act 2006 (Charitable Companies Audit and Group Accounts Provisions) Order 2008

I am grateful to all three noble Lords who have joined in this deliberation. I congratulate them as ever on their attention to detail, in particular the noble Lord, Lord Hodgson of Astley Abbotts. It was very kind of the noble Lord, Lord De Mauley, to thank me for stepping in—it is part of the brief; one has to be generic. I was greatly amused by the Kafkaesque description from the noble Lord, Lord Hodgson of Astley Abbotts. He had a good point. I try not to be in denial in those moments, but sometimes it is a parliamentary convenience. This order is welcomed in general terms across the charitable sector because it goes a long way to help simplify things and make life easier for some charities. That is an enormous benefit. Like the noble Lord, Lord De Mauley, I like to see the money that is given get to where it should to do the job that it should do. The thing that irritates me most on a personal level is when I find out that so much money that has been given gets absorbed and soaked up by unnecessary regulation and unnecessary bureaucracy. That is a common irritation. The noble Lord, Lord De Mauley, asked a number of questions that I shall try to work through. One was whether charities that are companies will be treated the same as non-company charities. Charities that are companies will be required to have their accounts scrutinised as a matter of charity law if they are not required to do so as a matter of company law. He also asked about group accounts. Charities already have to prepare group accounts. It is already sector practice for group accounts to be prepared. The commission looked at a sample of 70 sets of accounts where group accounts are now expected as good practice and in all but one case they had been prepared. Therefore, in our view and in the view of the sector, these changes do not create any significant new costs. Separate regulations will provide for content and scrutiny requirements and will also consider any additional regulatory costs that separate provisions might create. The noble Lord also asked whether company charities that have subsidiaries will be required to prepare consolidated accounts under the Charities Act 1993. The answer is yes, if they are not required to prepare them as a matter of company law. Another question related to who will have to prepare consolidated accounts. All charities will have to prepare consolidated accounts, but only above a certain threshold. Consultation suggested that a threshold of an income of £500,000 was generally supported. The noble Lord made a point about charities ending up paying more given the lower threshold for independent examination. Charity Commission information indicates that something like 85 per cent of charitable companies affected that have incomes of between £10,000 and £90,000 already have formal scrutiny, which is why we argue that only a small minority will face additional expense. It is already there. The cost of examination was another issue. The impact assessment indicates that independent examination costs only about £213. The noble Lord thought that was rather low and asked where we got the figure from. In essence, the figure of £213 for the cost of independent examination was derived from the administrative burdens reduction programme, which used a robust and consistent methodology to measure the cost of all government regulation of businesses and charities. The figure is relatively low because it takes account of volunteer independent examiners as well as professionally qualified examiners undertaking such work on fully commercial terms. Volunteers would have been costed, but at a lower rate than professional fees. I am sure we all know charities that use such volunteer labour, which is of tremendous benefit to them. Below an income of £250,000—