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Charities Bill [HL]

moved Amendment No. 7:"After Clause 26, insert the following new clause—"    ““RECEIVER AND MANAGER TO BE PAID BY COMMISSION    In section 19(6)(b) of the 1993 Act, for ““the income of the charities concerned”” substitute ““the Charity Commission for England and Wales””.”” The noble Lord said: My Lords, the purpose of the amendment is to make the Charity Commission responsible for paying its own receivers and managers and not the charity on which they are imposed. There are cases, such as the Little Gidding Trust case, where the commission initially refused to appoint a receiver and manager when the trustees requested it because it was believed that the charity did not have sufficient liquid funds to pay. The amendment runs counter to the arrangements for commercial companies, but the situation in charities is very different. First, funds to be used are not private commercial money of companies whose management has been incompetent. In charities, the funds are donations given by the public for charitable purposes. As I understand it—perhaps the Minister will confirm it—by law those donations must be used for the purposes for which they were given, not for spending on receivers and managers. Secondly, the commission has too often shown itself to be grossly irresponsible with charity funds in appointing receivers and managers. I shall give only one example today as I have given several in the past. That is the recently published case of the Kings Ministry Trust, also known as the Kingsway International Christian Church or KICC. This unincorporated trust has for some years been remunerating its trustees for various services and doing so quite openly. It made the mistake of not realising that it should have altered its constitution explicitly to allow that to be done. If something needs the commission’s permission, that is routine and not a large hurdle. I am told that the commission’s inquiry lasted nearly three years and has cost the charity £1.2 million for the receiver and manager and his eight consultants as well as considerable damage to its charitable work. The practical result is that this trust has been turned into a charitable company. Token restitution is to be paid by one of the trustees and some new trustees have been brought on to the board. With some advice from the commission and the use of the charity lawyer, the trustees of this charity could have affected these changes for some £12,000—one-hundredth of the sum the commission has already spent. Even if the trustees had been wildly extravagant, they could not conceivably have spent more than £120,000—one-tenth of the sum squandered by the Charity Commission. On 18 October, at col. 688 of Hansard, the Minister, the noble Lord, Lord Bassam, said that the Charity Commission had secured charity assets to the tune of almost £20 million for the seven cases which concluded in 2004–05. However, he did not mention, and probably does not know, that nearly the whole of the seven charities’£20 million was the assets of the KICC, much of which I am told was quite safe in the form of the church’s buildings and land in Hackney. The Charity Commission did not therefore secure or protect £20 million of charitable assets—most of it was not under any discernable threat. Or at least it was not until the commission decided to blow £1.2 million of charity funds on some expensive City consultants. When we last met, the Minister also told us,"““Such appointments are made only after careful consideration . . . and generally after a tender exercise””." He later said:"““The commission has a statutory responsibility to supervise all receiver and manager appointments, which it discharges in all cases””.—[Official Report, 10/10/05; cols. 687-88.]" Noble Lords may be interested to learn that the commission gave such careful consideration and supervision that under the receiver and manager it appointed to the Little Gidding Trust the quoted price rose from £10,000 to £25,000 by the time the inquiry closed. At the Cancer and Leukaemia in Childhood charity the receiver and manager was appointed for the price of £22,000, which had risen to £65,000 by the end of his investigation. At Iran Aid the contract price was £97,000, but when the receiver and manager left the charity was poorer by £470,000. In the KICC case, the quoted and contracted price was £140,000, which, as we have heard, rose to £1.2 million under the careful supervision of the Charity Commission—nine times the original price. The Minister invited the House to agree with the basic principle that it should not fall to public funds to pay for the cost of a receiver and manager. I put it to noble Lords that there is an overriding principle that funds donated for charitable purposes should not be made available to a regulator which has demonstrated time and again its ability to lose control of its own consultants and squander funds held in trust by charities for their beneficiaries. The amendment will have the practical effect of encouraging the commission to take considerably more care in its use of consultants than has hitherto been the case. I suggest that it will cause an immediate fall in the sums paid to receivers and managers and that this can only have a beneficial effect for the charities. When considering the remuneration of receivers and managers, Section 19(6)(b) of the 1993 Act states that the regulations made by the Secretary of State may make provision with respect to,"““the remuneration of such persons out of the income of the charities concerned””." Can the Minister confirm that in the cases I have mentioned—and in all cases—the remuneration of receivers and managers is paid out of the income of charities and not out of their capital assets? I beg to move.