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Charities Bill

A charity is an organisation that serves the public good and an institution that benefits people. Apart from the very necessary legal and regulatory questions, we should ask ourselves today how we can ensure that our charities can best function in the interest of those people. That is what I would like to speak about today. Charities can serve many purposes, and one of this admirable Bill’s main accomplishments is that clause 2 gives a clear statutory definition of charitable causes, thereby updating the law. One purpose can be, as mentioned in subsection (2), providing relief to the elderly and saving lives. I would like to refer to one recent example from my Hove constituency of the closure of a care home that was owned by a charitable trust. It provides a telling example of a local charity not acting in the interests of its immediate beneficiaries and we will see how the problem could be rectified by the Bill and what questions still remain. Before I come to that, however, I would like to say that I welcome the Bill, as many Members have today. It was a Labour Party manifesto commitment at the last general election to provide a new, modern framework for the voluntary sector in order to promote charities and give them better legal guidance. The present regulations for charities are indeed outdated. As my right hon. Friend the Member for Darlington (Mr. Milburn) pointed out, our courts still have to rely on the Charitable Uses Act 1601, passed under the first Queen Elizabeth, to determine what a charitable purpose is. It is also a great step forward that we now get a clear definition that a charity has to work for the public benefit, rather than relying on the old circular reasoning that an organisation pursuing charitable purposes must be a charity. The new public benefit test will remind all charities that they need to demonstrate their usefulness to the public on a constant basis. However, as my hon. Friend the Member for Selby (Mr. Grogan) said recently, we need to decide on a rigorous definition of public interest. In the light of recent experience in my constituency since the beginning of the year, I would like to highlight the reform of the Charity Commission’s powers. It is the first major shake-up since 1960, and I hope that it will take effect as soon as possible. Indeed, for some of my constituents, reform is already coming too late. Mr. Deputy Speaker, you may have read in the papers about the case of Dresden house, a care home for elderly gentlewomen in Hove. For many years, Dresden house was a very happy place for pensioners in Hove, a place where many members of my local communities wanted peacefully to spend their final years. It has been run as a charitable trust since 1910 and was highly praised in official reports. It was therefore a great shock to all the residents when, in January, the trustees suddenly announced that the home was to close and all residents were to move out in three months. Citing economic unsustainability as the reason for closure, the announcement left only 12 weeks for the elderly gentlewomen to find suitable alternative accommodation. Not only was the building destined to be closed but the many friendships built up over months and years by the residents in the community of Dresden house were about to be brought to an end. The trustees’ decision was perceived by many residents and their relatives to be unnecessary as Dresden house continued to provide a high standard of care, with new residents being admitted to the premises as late as December 2005. Deeming the closure to be unnecessary, the residents’ group contacted the Charity Commission for guidance, trying to find some facts about the decision to close. The group was headed by Nick Steadman, nephew of Dresden house resident Alice Pink, a 93-year-old gentlewoman who had previously worked as a nurse. I was introduced to Alice in January and came to admire greatly her resolve and strength of purpose. She had moved into Dresden house only in August 2005 and was looking forward to many happy, relaxing years in beautiful surroundings. The residents’ group and my office wrote many letters to the Charity Commission. I talked to both the commission and the trustees. However, the Charity Commission replied that, under its current rules, it was unable to help in the matter. Despite my intervention, the trustees were unwilling to provide their residents with a clear reason for closure other than general financial circumstances, which could not be independently verified because the trustees were unwilling to disclose their accounts before the end of the financial year and there were no regulations to ensure that they did so. The financial year would expire after the last resident was required to leave the home. The residents’ group offered themselves as trustees to oversee Dresden house, should the current trustees no longer wish to handle the responsibility of running such an institution. The trustees declined the offer. The Charity Commission had no powers to insist on its acceptance. Despite widespread support and sympathy, the trustees’ decision to close could not be challenged under the existing definition of public benefit. At the beginning of March, the elderly residents of Dresden house had the trauma of moving to new premises. Alice Pink was the last resident to leave at the end of March. Failed by the institutions, she appeared to lose her energy and will to live after having to move elsewhere. Two months after leaving, she was found with a note by her bed, which read simply ““I can’t go on.”” She had taken an overdose of painkillers. One week later, she was dead. Another resident, 84-year-old Edna Henshall, died having suffered a stroke on the day she was due to move out. It is in their memory that I speak today. Dresden house now stands empty. The residents’ group identified several points on which they felt that the system failed them. They felt let down by the Charity Commission’s inability to direct trustees to comply on consultation and disclosure of financial papers. The new powers for the Charity Commission in chapters 1 and 5 to direct and advise charities proactively are therefore much needed, and the commission must use them effectively. The residents’ representatives also complained about the Charity Commission’s difficulties in influencing the composition of the board of trustees. The Bill will give the commission more powers to intervene. May I take the opportunity to throw my weight behind the request of the hon. Member for Rochford and Southend, East (James Duddridge), who is no longer in his place, to provide that people with learning disabilities can become trustees of charities of their choice? Chapter 2 deals with the creation of a charity tribunal and also constitutes a clear improvement in the law. As things stand, if a care home is council run, residents can bring a case under the Human Right Act 1998 with a reasonable chance of success. In the case of Dresden house, users and their representatives have had no effective redress, since the commission essentially has the final say. In my local case, the people affected felt severely let down by the absence of a strong authority to handle appeals about Charity Commission decisions. The new tribunal will give people the certainty that there is indeed an institution they can approach as a last resort. According to schedule 4, affected individuals will get a right of appeal. The relatives of the unfortunate former residents of Dresden house humbly request that the tribunal be given the ability to accept any disputed case for review, without exception. Charities are man-made institutions for the benefit of the people. In the other place, there has been some debate about whether the commission should have reasonable regard to the well-founded interests of the beneficiaries of the charity. Material assets are, of course, important but we should focus on the people involved—our most senior citizens in the case that I have outlined. The issue was debated on several occasions in the House of Lords. My noble Friend the Home Office Minister Baroness Scotland assured the Lords that, although the focus on people was not expressed in the text of the Bill, it was implied. On 28 June 2005, she said:"““There is no doubt that the commission should take into account the interests of those affected by its actions. Two of the principles of best regulatory practice on the face of the Bill are that regulatory action should be ‘accountable’ and ‘transparent’, and these will involve the commission having regard to the interests of stakeholders.””—[Official Report, House of Lords, 28 June 2005; Vol. 673, c. 193.]" I am willing to believe that that is the case but I press my right hon. Friend the Minister and my hon. Friend the Parliamentary Secretary to assure me that the interests of stakeholders will play a more central role in the commission’s work. Will they ensure that, in its guidelines, there will be a clear undertaking to listen to the people who depend on charities? I do not claim that further cases such as Dresden house can be easily avoided by the Bill. However, I am sure that the clear guidelines that it provides will make it easier for the people affected to make their voices heard. I hope that the Government will ensure that the Bill stipulates that the Charity Commission and the charity tribunal will be the champions of the people who rely on them. We owe that to the many vulnerable people who depend on charities. We owe it to the elderly gentlewomen, formerly of Dresden house. It is in their honour and spirit that I support the Bill.