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Charities Bill [Lords]

As well as moving new clause 1, proposed by my right hon. Friend the Chancellor of the Duchy of Lancaster, I shall speak to Government amendments Nos. 28 to 30, 61, 65 and 69. The new clause deals with the accounts scrutiny regime for charitable companies—that is, charities established in the legal form of a company. One consequence is that smaller charitable companies are subject to a regime whose requirements are designed for small businesses, not small charities. In the debate on the Companies Bill in the other place, Lord Hodgson tabled Opposition amendments to take small charitable companies out of the company law regime for accounts scrutiny, placing them instead within the charity law regime. The Government accepted the merit of that idea and took representations from a number of umbrella bodies for charities and professional accountancy bodies and received a favourable response, so we agreed to proceed with the idea. At its heart is the sensible proposition that we should treat charitable companies primarily as charities, albeit ones that happen to be set up in company form, rather than primarily as companies that happen to have charitable status. To give effect to that, changes are needed to the Companies Bill and the Charities Bill. The necessary Companies Bill amendments were made on Report last week and the principal amendment to the Charities Bill is set out in new clause 1. The new clause contains a new order-making power, allowing Ministers to amend the Charities Act 1993 and the Bill to reflect changes in company law—the changes that will be made by the Companies Bill when it comes into force. The result will be that we can apply the same accounts scrutiny requirements—professional audit for those with an income above £500,000, independent examination for those between £10,000 and £500,000 and no compulsory scrutiny for those below £10,000—to all charities, regardless of their legal form. The order-making power will also allow the group accounting requirements to be changed so that, in preparation of group accounts, a group of charities headed by a charitable company is put in the same position as a group headed by any other form of charity.