I thank the noble Baroness, Lady Bennett, for tabling these amendments, slightly amended from Committee, and in particular for responding to the Minister’s concerns that the first amendment had perhaps been too broad and would catch the day-to-day business of companies. That cannot be said about Amendment 145.
I also want to pick up a point that the noble Earl made in Committee. He said:
“A company’s working capital, by its nature, is money that is used to fund day-to-day operations in general, and one cannot associate a particular pound with a particular business activity.”—[Official Report, 4/2/22; col. 1161.]
Yet the Charity Commission does have the ability to intervene in the event that a charity, or series of charities stretches—shall we say?—those rules. Its Internal Financial Controls for Charities, CC8, provides very specific guidance. Indeed, in recent years, one charity, the Plymouth Brethren Christian Church, was investigated for a circular set of donations. Each donation to each different body was paid tax relief out of the public purse, coming back to serve the schools that the adults at the community church sent their children to. The way that was structured was similar to a financial instrument employed by the few companies that abused the funding they received from the public purse for social care.
The noble Earl also referred to the Treasury guidance Managing Public Money and Accounting Officer Assessments. I have been through that, too. It is very interesting and clear. Under the heading
“expenditure which may rely on a Supply and Appropriation Act”,
Managing Public Money lists
“routine administration costs: employment costs, rent, cleaning etc … lease agreements, eg for photocopiers, lifts”.
It does not say: “Re-charging sister/parent/daughter companies for large amounts of borrowing and the interest thereto”, which is what has been happening.
It is important that we start to debate how public funding is spent by these companies, particularly those overseas, when we cannot see how that money is spent. I also support the other amendments in the group, which ask for a review of financial regulation. It is interesting that the Treasury guidance refers constantly to the Nolan principles, which are absolutely vital in talking about transparency and responsibility when spending public money. These amendments might not be quite right to deliver that, but it would be good if there were a review under way.
The other thing we must have when these companies spend large amounts of public money is publication of their full accounts. They should not be able to hide behind very short, superficial accounts from overseas.