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Charities Bill [Lords]

New clause 3 addresses a problem that has, I think, arisen by accident. Before the Charities Acts 1992 and 1993, section 29 of the Charities Act 1960 provided that no land held by or in trust for a charity that—this is an important phrase—had been occupied for the purposes of the charity could be sold, leased for more than 22 years, mortgaged or charged to security without the consent of the court or the Charity Commission. Section 32 of the 1992 Act superseded the 1960 Act and imposed an overall prohibition of disposal of any land held by, or in trust, for a charity without an order from the court or the Charity Commission. That section was repealed and re-enacted without alteration as section 36 of the 1993 Act, which is the crucial provision that we are addressing. The effect of the rather rushed 1993 legislation was inadvertently to catch a category of land held in trust for charities, left in wills as a charitable bequest, which had not been included before 1992, because the original Act covered only land held in trust and that had been occupied for the purposes of the charity. The section 36 requirements were perfectly reasonable for the normal disposal of land by charities, which had to acquire a proper valuation and go through various procedures set out in the section. However, by applying such procedures to land left in legacies the 1993 Act inadvertently gave charities a new and serious burden. I shall give the Minister a few examples. Macmillan Cancer Support derives about 33 per cent. of its total income from legacies. It says:"““We spend, as best we can calculate it, some £14,500 a year on section 36 reports. This includes not only the surveyor’s fee (and VAT which we cannot reclaim) but also the costs of staff in considering, processing the information, passing it to Trustees for approval, all communication with estate solicitors and co-beneficiaries and ancillary costs such as postage and photocopying…There is without doubt an adverse effect on the charity overall. The majority of the reports simply confirm what the estate Executor has already informed us about the property’s broad state and value, which will usually include, for instance, an offer higher than probate value, or the possibility of development. In a small number of estates, the s36 valuation does show a higher value than the estate administrator has believed appropriate; however, it is not always the case that the market then offers the higher price.””" It calculates that"““the time spent in considering, processing and forwarding the reports represents nearly four weeks of a person’s time each year, for almost no benefit””." Macmillan makes the important point that the fiduciary duty on executors would protect assets held in trust for the charity by the executor. It states:"““We feel that little additional protection is given to the Charity’s trustees beyond that which already exists by virtue of the Executor’s duty to maximise assets.””" Macmillan is quite a large charity, but the provision affects smaller charities, too, for which it might be even more onerous. A letter from Battersea Dogs Home, which is at the lower end of the larger charity scale, states:"““Section 36 has proved to be incredibly confusing and costly to the charity…Unfortunately, I do not have exact figures of how many s36 reports we request per year but approximately 20 … £10,000 of charity money on reports is a lot of money, which could easily be applied elsewhere to help our cause.””" At the upper end of the scale, the largest charity of all—Cancer Research UK—estimates that it has spent more than £80,000 on section 36 reports in the past year and tells me:"““Release of capital from estates can be prolonged due to irregular meetings of trustees and administrative hold-ups.””" One of the procedures that are particularly onerous for larger charities is that the section 36 reports have to be presented to the charity’s trustees and approved by them. That is all very well for an occasional disposal of land, but larger charities frequently have to deal with land left to them in legacies, or held in trust in legacies. Large charities such as Cancer Research UK depend greatly on legacies, so the provisions are a burden on the trustees as well as on the charity’s staff. All in all, that adds up to a serious problem, about which we have previously advised the Minister, so I shall be interested to hear his comments. If he can provide a suitably robust form of words I shall be reassured, but this is a matter of law and unless the Bill is amended it is difficult to imagine how the problem can be tackled.