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Charities Bill [HL]

My Lords, it will be best if I repeat the key points that I made on Report, when the noble Lord moved an identical amendment. I say that because they still represent the Government’s view. In practice, the appointment of an interim manager is usually a last resort for the commission when it considers that it is essential to secure the assets of a charity where it has found evidence of serious misconduct or mismanagement in the administration of a charity, or where it is clear that assets are at risk. A formal inquiry into the charity must also be under way under Section 8 of the Charities Act 1993. Before taking the serious step of appointing an interim manager the commission will have considered all other options. In the majority of cases appointments are made after a tender exercise to get the right person for the job at value for money. We still believe that in these circumstances it is usually appropriate that the charity pays for the cost of the interim manager. Charities must be responsible for their own affairs and responsible for the consequences of their decisions and actions. This includes the consequences of mismanagement. In most cases public funds should not be used to pay the costs of an interim manager appointed to a charity because of the actions of the trustees. I also mentioned on the previous occasion that the cost of the appointment of an interim manager should be weighed up against the benefits to charities. In the seven cases which concluded in 2004–05, as the noble Lord, Lord Swinfen, acknowledged, £20 million-worth of charity assets were secured. The commission has the power, where appropriate, to meet the fees and expenses of an interim manager from public funds. In its recent letter to Peers who spoke on Report, the commission gave details of two occasions during the past two years when this happened. The first was in the case of Lincoln Council for Voluntary Service, where a receiver and manager was appointed from July 2003 until November of that year. The cost was £3,500 plus VAT. The second case is a case in progress. The commission’s letter states that this is where,"““a receiver and manager was appointed on a contingency basis on 13 December 2003. As the charity had no cash assets at that time an indemnity was offered but the costs were eventually met by the charity. Because this case is still in progress the name of the charity has not been made public””." However, we would expect the use of public funds to be in exceptional cases. The commission has a statutory responsibility to supervise all receiver and manager appointments, which it discharges in all cases. In some cases, the costs of professional advice incurred by the interim manager would be incurred by the trustees were the interim manager not in place. The commission is very aware of the sensitivities involved in appointing an interim manager, and particularly of the resultant costs to the charity. It has recently started publishing the costs of interim managers. In July this year it published the costs of receiver cases concluded in 2004–05, and the details are still available on its website. The commission, when publishing the details, said:"““Details of individual appointments are provided in the Inquiry Report which is published after the conclusion of each Inquiry. These reports are available on the Commission’s website. However to further increase transparency the Commission has decided that at least once each year it will publish together certain details of all R & M appointments closed in the financial year and the number of such appointments remaining in operation””." I will also add that the new powers to give directions to be conferred on the commission under Clauses 20 and 21 may lead to a reduction in such appointments as they will provide an alternative and simpler route to dealing with some of the concerns that currently give rise to appointments. The noble Lord, Lord Swinfen, referred to the Kingsway International Christian Centres appointment and receiver managers. A recently published report of an interim manager appointment related to the Kings Ministries, where the actions of the interim managers appointed by the commission secured charitable funds of more than £19 million. KICC took over the running and management of it on 23 March, having been appointed sole corporate trustee of the Kings Ministries. The Kings Ministries’ financial performance during the period of the appointment was very impressive. The charity’s income grew to more than £8.5 million in its financial year ending March 2004, and the interim managers made gift aid claims to the value of £3.3 million for the financial years 2000–2004. The commission believes, understandably, that the future success of this charity is assured by the charity having new trustees, a new senior management team, an extremely strong financial performance and a new incorporated structure. That demonstrates the benefits of such appointments. The noble Lord, Lord Swinfen, asked whether the receiver’s remuneration always comes out of a charity’s income rather than its capital. As far as I can be certain, that is the case. We have covered the issue several times, and I think that we have the legislation and the framework right. The type of intervention that I have described is a good example of what can be achieved through the right sort of appointment when a charity in the past has perhaps operated below par or inappropriately. I trust that the noble Lord will withdraw his amendment.