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Charities Bill [HL]

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 33. I shall also speak to Amendments Nos. 71, 80 and 81. The present accounts scrutiny regime for charitable companies—charities that are established in the legal form of a company—is a company law regime. One consequence of that is that smaller charitable companies are subject to a regime whose requirements are designed for small businesses, not for small charities. Larger charitable companies—those whose annual income is above the professional audit threshold of £500,000, as it will be set by this Bill—are in a better position, as the company law scrutiny regime for larger charitable companies is effectively already the same as the regime prescribed by charity law for unincorporated charities. In our debates on the Companies Bill, the noble Lord, Lord Hodgson, tabled amendments that would have taken small charitable companies out of the company law regime for accounts scrutiny and placed them instead within the charity law regime. The Government accepted that there was merit in that approach. We took representations from a number of umbrella bodies for charities and professional accountancy bodies and received favourable responses. We therefore 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 both to the Companies Bill and to the Charities Bill. The necessary Companies Bill amendments were made in that Bill’s Report stage in another place last month and were agreed in your Lordships’ House last Thursday. The principal amendment to the Charities Bill is Amendment No. 80, which contains a new order-making power allowing Ministers to amend the Charities Act 1993 and the Bill to reflect changes in company law 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 to all charities regardless of their legal form. Once the relevant parts of the Companies Bill have come into force and the order has been made, those scrutiny requirements in the case of small charitable companies will be in charity law rather than company law. The order-making power will also allow for the group accounting requirements to be changed so that, as regards the 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. This order-making power will allow Ministers to amend primary legislation. The order will be subject to the affirmative resolution procedure, which Amendment No. 71 achieves. The other two amendments in this group, Amendments Nos. 33 and 81, are minor and consequential. There will have to be careful co-ordination between the Department of Trade and Industry and the Cabinet Office over the timing of the company law and charity law changes. Our intention is to put that in motion as soon as we can in the next year. The changes cannot be instant because, in accordance with our obligations under the compact between the Government and the voluntary and community sector, we will need to consult charities, professional accountancy bodies and other interested parties by publishing an exposure draft of the order for a reasonable period. Noble Lords can be assured that we intend to press ahead with these changes as soon as we can. Moved, That the House do agree with the Commons in their Amendment No. 33.—(Lord Bassam of Brighton).