Planning Bill

My name is attached to this amendment and to subsequent amendments. I apologise to the Committee for not having taken part in proceedings before, and not having taken part in Second Reading on 15 July. I was abroad at the time, but when I read Hansard and saw that there were 37 speakers and that the debate finished at half past midnight, I suspected that another speaker would not have been particularly welcome at that time. I have a particular interest in the charitable and voluntary sector and therefore in the implications of CIL for the sector. I declare an interest, which is in the register, as president of the National Council for Voluntary Organisations. Like the noble Lord, Lord Cameron, I have noted and read carefully the amendment tabled by the Government in the name of the noble Baroness, Amendment No. 437C. While I accept that it goes a little way towards meeting the concerns of the sector, in essence I find it dangerously imprecise and extraordinarily permissive. The detail of the wording says that the regulations must, "““provide that an exemption or reduction””," may be allowed. A reduction could be something or nothing; it could be 1 per cent. Therefore, that might provide a useful means to charity but it might also be a means to charge charities at effectively the full rate of CIL. The second paragraph of the new subsection proposed by the Minister’s amendment states that the regulations will permit charging authorities to make arrangements to reduce. Permission is all very well, but which charging authority faced with a golden goose will step aside? Like the noble Lord, Lord Cameron, I argue that the Government should recognise the special position of charities, which, as he said, are exempt from tax apart from VAT. This is not a party political matter; it is a situation which has persisted for many years and which the Government should now take on board. As the police would say, I have form on this matter, because I had the pleasure of taking the Charities Bill through your Lordships' House from the Front Bench. I have put my name to amendments in this group because I have three major areas of concern about what the Government are doing. First, the Government’s proposal is quite at odds with their stated policy objectives as regards the voluntary sector. Secondly, unless a full exemption is given, the practical implications for charities are potentially very serious. Thirdly, the Government fail to recognise the particular role and duties imposed by law on charities and their trustees. I shall deal briefly with those concerns in order. The first is on the Government’s policy towards charities. At Second Reading of the Charities Bill on 20 January 2005, the Minister’s colleague, the noble and learned Baroness, Lady Scotland of Asthal, said: "““The Government's three aims for the Bill are: first, to provide a legal and regulatory environment that will enable all charities, however they work, to realise their potential as a force for good in society; secondly, to encourage a vibrant and diverse sector independent of government; and thirdly, to sustain high levels of public confidence in charities through effective regulation””.—[Official Report, 20/1/05; col. 883.]" I call that a ringing endorsement of a charity and voluntary sector. I shall not bore the Chamber by quoting more extensively from the noble and learned Baroness’s speech, nor from the Minister who did most of the detailed work during the passage of the Bill, the Captain of the Gentleman-at-Arms, the noble Lord, Lord Bassam of Brighton. In the light of what the noble and learned Baroness, Lady Scotland, said, government Amendment No. 437C is an apology for an amendment, with many weasel words and carefully phrased let-out clauses. If the Government really believe that the voluntary and charity sector is important, as they said it was, they should allow a full exemption now. Secondly, I turn to the practical implications, some of which were dealt with by the noble Lord, Lord Cameron. In essence, many charities are fixed-asset rich and liquid-asset poor; that is, their assets are tied up in a building—it may be a school or housing. They have relatively little cash apart from working capital. Indeed, we want them to have relatively little cash because we do not want them to be sitting on piles of money, but to use their resources for the society in which they operate. From time to time, they will need to upgrade their assets. They might wish to put a language laboratory into a school or upgrade sheltered housing with ramps, new alarm systems or some new provision of health and safety. To do this, they will probably have to sell part of their assets—it may be a bit of their land—and they may wish to maximise their return by doing so with planning permission. If CIL is to be imposed on them, either they will have, as the noble Lord said, to raise money to pay the tax—it is not attractive to go rattling the bucket and saying, ““Will you give me some money to pay some tax to the Government?””; I am not sure that the Government would wish to be portrayed in that light either—or they will have to skimp on the project, or they will have to sell at a lower price to reflect the impact of CIL. What about gifts that are not directly linked to the charity? An example might be a well run charitable school in London, meeting all the targets and doing a really good job in its community. It has many supporters, one of whom has, let us say, a weekend cottage in Norfolk with a garden of two acres. He decides because he has supported the charity for many years to leave the cottage and its grounds to the charity in his will. When he dies, the charity will then be faced with three options. The first is to sell as is. Secondly, it might be advised that it is in a village where the infrastructure plan suggests that development could take place and that if it applied for planning permission for four houses in the garden, it could then sell at a better price. Thirdly, it will have just to pass it on without getting the full benefit of the enhancement in value. In each case the funds will have to be—not may be—deployed for the educational charity back in London which received the gift. I say to my noble friend Lord Dixon-Smith that I am not sure that his Amendments Nos. 438A and 438B cover charities receiving gifts that are not linked to the original site. Therefore, if CIL is proceeded with, people may either be deterred from giving because why give money if the Government are going to garner part of the gain in the form of tax, or the charity has to sell without maximising the full potential return. Finally, I tackle the special role and position of charities. The 1601 Act presumed charitable purposes for three activities—the relief of poverty, the advancement of religion and the advancement of education. The Government’s 2006 Bill removed that presumption. No longer could you presume that you were charitable because you carried out one of those functions. Now you have to be within one of the 12 purposes laid out in that Act. So every charity has to go through two threshold tests. First, are they charitable? Do they fit into one of those categories? Secondly, and most importantly, do they provide a public benefit? The Charity Commission now has increased powers to ensure that those two tests are being met. So a charity must always deploy its funds in pursuance of its charitable objects, and these must have a benefit for the public. If it fails to do so, its trustees—and, indeed, it—are liable under the law. Therefore, the idea that somehow huge windfalls for private companies or individuals involved with charities might take place if CIL is not imposed is fanciful. If the Government really want to do what they say they wish to do—to enable charities to realise their full potential as a force for good in society—then they will not seek to impose CIL on the sector. I understand, although I am no expert in these matters, that there is in any case the backstop powers in the Town and Country Planning Act to deal with extreme cases. I have not seen the noble Baroness’s speaking notes but I can probably guess what they are going to say. First, there will be honeyed words about how important the charitable sector is, how the Government believe they are doing a wonderful job, the many things that the Government have done to encourage the charitable sector, and how indeed they have produced a whole Charities Act to show that they mean that the charity sector is very important to them. So we will have, I am sure, a deluge of honey. After the deluge of honey we will then have a further enticement about regulations. We had the demolition of the regulation argument from the noble Lord, Lord Goodhart, in the Second Reading debate. Indeed, the words of the Minister’s colleague, John Healey, in the Committee stage in the House of Commons caused one to have further doubts about what might lie down the road because, as people have pointed out in several debates earlier today, we do not know what the regulations are going to be. The second thing to be said about regulations, of course, is that when we get them they are unamendable, so we are stuck with what we get at that particular time.