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Charities Bill [Lords]

I apologise for not giving way to the hon. Gentleman, but I need to make progress. The commission has already begun discussions with the major religions of our country precisely to give them reassurance. I hope that the right hon. Member for Maidstone and The Weald will accept my reassurance, too. I am pleased that my hon. Friend the Member for Selby (Mr. Grogan) has tabled amendment No. 1 because it gives us the chance to talk about another aspect of public benefit. On Second Reading, I set out several principles of the Government’s approach to the charitable status of fee-charging institutions, including private schools, and I want to reiterate them today. I say in passing to the right hon. Member for Maidstone and The Weald that while I think that the bar will be raised, especially for fee-charging institutions that were not subject to the scrutiny of the Charity Commission because of the presumption, I do not believe that I said the words that she attributed to me. However, perhaps we can take that up on another occasion. Our first principle is that all charities must pass the public benefit test and be continually tested on that by the Charity Commission. The removal of the presumption will lead to that big change. The presumption meant not that there was no public benefit test in all circumstances, but that existing charities were not scrutinised by the commission. The measure is designed to bring about consistency, as the commission has confirmed. The history of this is that when the register of charities was established in 1960, private schools were automatically put on it if they had previously been granted charitable tax relief by the Inland Revenue. Our second principle is that indirect benefit—the claim that private schools save money for the taxpayer by educating pupils, for example—should not be enough to justify charitable status. That is right, and the view is shared by not only Labour and Liberal Democrat Members, but the Independent Schools Council, which says that indirect benefit savings to the taxpayer should not be enough, given that private schools enjoy the benefits that come with charitable status. Some hon. Members asked what private schools will have to provide—my hon. Friend the Member for Selby asked whether token benefits would be enough. The Charity Commission will have to make a case-by-case examination, but reassurance is available on the point of principle. The commission said in its briefing earlier this week:"““It will not normally be possible to demonstrate public benefit through indirect benefits alone, such as savings in public expenditure””." The schools must thus normally provide direct benefits. However, can those benefits be simply for wealthy people who can afford the fees? Again, the commission’s briefing helpfully indicates the way in which it wants to move forward. It says:"““Charities which charge relatively high fees must demonstrate accessibility to those facilities or services””." Even at this late stage, I hope that when the hon. Member for Isle of Wight winds up the debate, he will announce the Conservative party’s conversion to such a basic principle of fairness. The benefits will need to be extended beyond the narrow class of people who are able to afford fees and it is unlikely that a token provision will be sufficient. To answer a question asked by my right hon. Friend the Member for Darlington, the Government believe that the benefits should be direct and meaningful. Generally, we believe that a school that does a range of things to widen access through partnerships with state schools and educational initiatives in the local community—I pay tribute to the many private schools that do this—will find it easier to demonstrate a public benefit. Our third principle is that the Bill will raise the bar for private schools. I tell the right hon. Member for Maidstone and The Weald that the key point is that this is about fee-charging institutions that previously benefited from the presumption that charitable status was automatically conferred on them. That is why I do not believe—if I said this, I misspoke—that the bar will be raised for religious charities or charities dealing with poverty. This raising of the bar relies on a Charity Commission with a robust plan to implement it, as the Charity Commission has shown. It is embarking on a worthwhile process, involving the development of principles around the implementation of public benefit. It has promised to look specifically at the fee-charging sector, and it will consult the public about their attitudes. In the case of fee-charging charities, there has not been a directly relevant case for almost 40 years, as we heard, so the commission is right to develop its approach by consulting the public, taking account of the passage of time since re Resch. The Bill seeks to establish confidence in the charity brand. The fourth principle of the Government’s approach—again, this is important—is that it is for the Charity Commission to take individual decisions about particular institutions. This is necessary because a rural private school miles from a neighbouring state school has a different ability to co-operate with the state sector than an urban private school, for example. Similarly, the private school for disabled children or those with learning difficulties, which my right hon. Friend the Member for Darlington mentioned, may face different pressures, compared with other types of private schools. All those differences need to be taken into account by the commission. That has made framing a specific amendment to the Bill hard, as has been found by many hon. Members who have tried to do so. The dilemma is between an amendment so wide as to add little to existing law or so precise as to have unintended effects. Over the summer we considered the matter and we were not able to find an amendment that satisfied all the demands. The amendment tabled by my hon. Friend the Member for Selby, if I may say so, falls into the first category. It does not add to the existing law. His amendment states that in determining whether a body provides public benefit, regard must be had to"““any undue restriction on obtaining that benefit””." The nature of the public benefit test, though, is that charitable status is not established if relief is accorded to a selected few out of a larger number equally willing and able to take advantage of it—in other words, if there is undue restriction on those able to obtain that benefit. My hon. Friend said in a recent letter explaining his amendment that the Charity Commission should have to weigh public benefit provided by the school against the restricted access to those benefits. I agree with that, as I have said. From our point of view, the amendment is unnecessary, but we want to see proper implementation of the principles. That is why we will review the effect of the public benefit provisions not five years, but three years after implementation, and if they are not having the intended effect and are failing to raise the bar, we will consider all necessary options. My hon. Friend is concerned to ensure that regard must be had to any undue restriction on benefits. As I have made clear, this is part of the public benefit test. It will be part of the review to determine whether our intentions have been met. This is a good Bill and we should resist the two amendments.