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Charities Bill

It is a great pleasure to follow the hon. Member for Rochford and Southend, East (James Duddridge), who made a measured speech which, while based on local experience, had national implications on which we should all reflect. The highlight of our debate, however, was the moment when my right hon. Friend the Member for Darlington (Mr. Milburn), at the end of a long and thoughtful speech, asked Ministers to satisfy themselves that the public benefit test, as applied by the Bill, will make a difference. In my brief and modest remarks, I should like to ask whether Ministers have satisfied themselves that it will be a rigorous test of public benefit. The hon. Member for Sutton Coldfield (Mr. Mitchell) characterised some Labour Members as old-fashioned class warriors. I do not look at myself that way: I am a Yorkshireman who does not believe in ““summat for nowt””, and I think that all institutions that benefit from the public purse should justify themselves. Representing one of the United Kingdom’s more rural constituencies, I like to think that I have my ear to the ground of middle England. When organisations such as the National Council for Voluntary Organisations, the Royal National Institute of the Blind and Age Concern ask for further clarification in the Bill, I sit up and take notice, and that is what I seek from Ministers. We have a dream team on the Front Bench. It is a great pity that the Minister for the Cabinet Office is not in the Chamber, as she gave me a great deal of good career advice when she was Chief Whip. Her talent for tact and diplomacy is known throughout the House, as is her closeness to No. 10, and those qualities will be important in securing the passage of the Bill. To complement her strengths, we are lucky to have a rising star in the Parliamentary Secretary, who is close to the Chancellor, speaks about the renewal of the Labour project and, indeed, social democracy, and has demonstrated great intellect in his interventions. I hope to persuade that dream team to just go a little further and ask the questions that my right hon. Friend the Member for Darlington asked. I refer to the voice of middle England and what the Charity Commission is saying about the Bill. I attended the same briefing that my right hon. Friend the Member for Cardiff, South and Penarth (Alun Michael) attended last week. I noted carefully the words of Andrew Hind, the chief executive of the regulator. He said that there was a worrying lack of clarity in the underlying case law. He certainly did not want inflexible wording in terms of a definition of public benefit on the face of the Bill, but he said that he would like clarification, possibly on the face of the Bill, about the application of this test. We have all seen the press release from the National Council for Voluntary Organisations and the words of its chief executive, Stuart Etherington. The NCVO says that, at present, the Bill extends the public benefit test to all charities on the basis of existing case law. However, it goes on, for charities that charge high fees for their services, this means that they will have to show only that the less well off are ““not entirely excluded””. This does not go far enough. Anyone able to benefit from a charity service must have a reasonable chance of doing so, says the NCVO. Stuart Etherington is quoted as saying:"““Charities have long recognised the need to update charity law, and have pressed for this important legislation. The Charities Bill must protect and promote the charity ‘brand’, by making it clear that only those organisations that benefit the public can be charities.””" We have had a number of suggestions as to how the application of the public benefit test could be clarified in the Bill. The example from Scotland was given, and there are other examples. The noble Lord Phillips in the other place made a suggestion. I do not think that the fact that Scotland has passed one law and we may be about to pass another one can be entirely dismissed. For example, if, to take a completely random example, Fettes in Scotland was ruled not to be worthy of charitable status in Scotland under one regime, could it then apply in England under another regime, and perhaps up ship, and so on? One of the phrases that keeps coming up in many of these amendments concerns charges not being ““unduly restrictive””. That has some merit and should be considered by Ministers. After all, the alternative is simply to rely on case law. My right hon. Friend the Member for Darlington, whom I feel very close to on this issue, said that he did not think that it was a sufficient defence for, shall we say, private schools to claim public benefit just on the ground that they saved money from the public purse. But when one considers the only major case in this area in the last 40 years, one can draw precisely that conclusion—that public schools would have that defence. In 1967 the case of Re:Resch, concerning a private hospital run by nuns in Australia, was appealed to the Privy Council. Lord Wilberforce, in giving the judgment upholding the charitable status of the hospital, said:"““It would be a wrong conclusion…to state that a trust for the provision of medical facilities would necessarily fail to be charitable merely because by reason of expense they could only be made use of by persons of some means””." In other words, the level of charges did not matter. He goes on to justify that by saying that the judgment"““results from the relief to the beds and the medical staff of the general hospital””—" in other words, the saving from the public purse. Therefore, I urge Ministers that, if we are to meet the test set by my right hon. Friend, that the Bill should make a difference, we need to heed the words of the Charity Commission and the NCVO, not old-style class warriors, and look for further clarification in the Bill. My right hon. Friend and the Joint Committee went much further in one of their musings than I would choose to do and said:"““Nonetheless we believe that the Government should consider reviewing the charitable status of independent schools and hospitals with a view to considering whether the best long term solution might lie in those organisations ceasing to be charities but receiving favourable tax treatment in exchange for clear demonstration of quantified public benefits.””" I would not go that far, but I urge Ministers to look at the question of the application of the public benefit test. Perhaps my right hon. Friend was reacting to some of the evidence before the Committee. A former public school headmaster, Dr. Anthony Seldon, said:"““There are two very different kinds of independent school.””" I think that he is right. There are what he characterised as the small minority: what my right hon. Friend referred to as up to 50 per cent. of private schools, according to figures from the Independent Schools Council. Dr. Seldon referred to"““the small minority which are very wealthy which are doing extremely nicely…and which…I do not think are very innovative. They look after themselves and they pay lip service to odd charitable things, but they are a self-perpetuating oligarchy and…they have great wealth, and I think they should be doing much more””." That is the voice of someone with knowledge of the private sector. We are talking about £100 million of public money. We are talking about giving 80 per cent. relief on uniform business rates; tax relief on bank deposits and income from investments; the ability to claim back tax paid by benefactors; and exemption from VAT payments on fees—not inconsiderable matters. This test should be a rigorous test. There are two possible scenarios. I hope that my neighbour, my hon. Friend the Parliamentary Secretary, will listen to the debate and the moderate voices of the NCVO, the Charity Commission and his many friends on the Labour Back Benches who wish him well in his future career, and consider adding to the Bill with regard to the application of public benefit. If he does that, he could create a progressive consensus in the House. Not only those on the Government Benches, but in this instance at least the Liberal Democrats may well be part of that progressive consensus, and we could be faced with a Conservative party which, remarkably today, is to the right of the Independent Schools Council in that it insists that the public benefit test should not apply to private schools. That is a remarkable position. I do not think that the right hon. Member for Witney (Mr. Cameron) has noticed this, and that position may well change by Third Reading. Even so, I think that the Conservative Opposition would oppose such an amendment. Such a progressive consensus could be created. The alternative is probably for an amendment in line with the wishes of NCVO and the Charity Commission to be moved, perhaps from the Government or the Liberal Democrat Benches. Then we would have the unedifying spectacle of those on the Government Benches being divided on the issue. If the renewal of the Government was one of my central concerns, I know which of those two political scenarios I would be aiming for.