My Lords, this Bill improves the efficiency of the charity sector by implementing the majority of the recommendations from the Law Commission’s Technical Issues in Charity Lawreport. The Bill simplifies a number of processes, promotes consistency and reduces overcomplicated regulation. Rather than be burdened by overly bureaucratic processes, charities will be able to focus their resources on the public good. The Law Commission and the Charity Commission are in full support of the Bill and it has been welcomed by the sector.
During the pandemic, the charity sector has received several billion pounds of support from the Government, including a £750 million package of support for charities, social enterprises and the voluntary sector, as well as benefiting from the cross-economy measures that the Government have introduced. We are deeply grateful to the thousands of charities and social enterprises, large and small, that have provided practical and emotional support to people in every corner of this country. It is now time for us to address regulatory change that will continue to make a difference to charities in the longer term.
In 2017, the Law Commission published its Technical Issues in Charity Law report, taking inspiration from the review of the Charities Act in 2012 produced by my noble friend Lord Hodgson of Astley Abbotts, and after extensive consultation with the charity sector and charity law stakeholders. The Law Commission gained valuable insights from an array of consultation events and meetings involving representatives from across the sector. This close engagement has led to various iterations of the proposals, and the Bill reflects this extensive input and scrutiny.
This is a highly technical Bill. However, the changes that it brings will, together, give charities more flexibility, time and resources to fulfil their charitable purposes. While we must ensure that the appropriate safeguards are in place to protect the public’s trust in the sector, we also have a duty to shape legislation to work for those delivering such vital services, helping those in need and working to improve lives. I believe that the Bill strikes a sensible balance between protecting charities’ assets and avoiding unnecessary expense and bureaucracy. The Bill makes a number of amendments to the Charities Act 2011. I will now explain the changes that the Bill will bring, grouping the clauses into themes for clarity.
Clauses 1 to 5 of the Bill will simplify current processes for amending governing documents and provide greater flexibility. The Bill will align these amendment mechanisms as much as possible across the different legal forms that charities can take.
Clauses 6 and 7 make it easier to use funds from a failed fundraising appeal for other similar purposes, alleviating the need for charities to expend time and resources to search for donors of small donations.
My Lords, I declare my interests as in the register, as a trustee of a number of charities and as an ambassador.
I welcome this Charities Bill, which was announced in the Queen’s Speech on 11 May, and these important changes to charity law. I am pleased that the Charity Commission has been working with the Law Commission and the Department for Digital, Culture, Media and Sport. These consultations have been going on for a number of years, and I now have the pleasure of seeing that they will be enacted. I am also pleased that the Labour Party supports this Bill.
Charities will be able to have access to a wider group of professional advisers on land disposal. We know that many charities are left properties and land by beneficiaries who want to help them, as they are personal charities in many ways. Also, many charities have properties as investments. As a patron of the Community Foundation for Northern Ireland, I know that we were lucky to have been able to sell two large offices at a time when the charity needed investment to buy a better office and work with more staff. In difficult times, it is often necessary to sell.
I am pleased about the flexibility around charity endowments. Endowments are an excellent form of good housekeeping. In the long term, as we come out of Covid, we will have a great opportunity to encourage smaller charities to allow endowments. We have seen how this has helped some charities that have had difficulties during and prior to Covid because of difficulties in themselves. Trustees will be able to borrow up to 25% of their present endowments, but I want to be assured that there will be a way of monitoring this and ensuring that the borrowing does not endanger them. I know that trustees would not wish to do that, but outside advisers should ensure that charities and their staff are not endangered by this.
On the question of appeals, I have been involved in cases where charities have had great appeals but the companies that charities use to assist them in their appeal are not always transparent. As the Bill proceeds, I would like to see us put in a few more clauses to protect charities from these companies and show how we will be more transparent, because the companies that assist charities always get paid. I hope that charities will have full disclosure when using these companies, because sometimes the amount that they take is more than the charities are able to raise. This is a really important issue for us and for the Government, as well as to protect trustees and staff.
My Lords, I refer to my interests as in the register. I welcome these measures to make charity regulation more effective. As a nation, we owe our charity sector a legal framework that is clear and unambiguous. These measures will make it easier for charities to navigate the law and carry out their functions effectively while retaining important safeguards.
I welcome the introduction of greater flexibility with regard to fundraising appeals. Ensuring that donations go towards the purpose intended, or as close as possible, is important, as is the trust between the donor and the charity. This change strikes the right balance. However, it would be helpful to monitor the use of this power with a view to raising the limits in the Bill.
Several changes to provide additional clarity around permanent endowments and the extension of the toolbox available to trustees in seeking to further their charitable purposes are helpful, too. Powers relating to the appointment of trustees, payment of trustees, clarity regarding transfer of gifts following a merger, and making it easier for charities to amend governing documents to dispose of land efficiently are all very sensible.
Good governance of charities is crucial both for accountable stewardship of resources and for retention of public confidence. It will, therefore, be important to ensure that the Charity Commission, as a regulator, is properly resourced and has the capacity to help implement these changes and, where necessary, to keep the changes under review.
Charities are facing difficult times dealing with the recovery from the pandemic. Some 85% of charities expect to be delivering services at pre-pandemic levels this year, but fewer than half expect a return to pre-Covid fundraising levels. If it is the Government’s role to unlock the potential within civil society, we need much greater and stronger leadership from government to support civil society to develop capacity, capability and resilience.
My Lords, my noble friend the Minister was kind enough to refer to the official review of the 2006 Act that I carried out now nearly 10 years ago. I take a certain paternal pride that a large number of the recommendations that I made in that report have survived and appear in the legislation before us this afternoon, but it would be quite wrong for me to say that a report that took more than a year to produce and ran to 150 or 160 pages could be produced by one person. I should begin, therefore, by placing on record my thanks to the team—then at the Cabinet Office, now at the DCMS—led by Ben Harrison, which provided such wonderful advice and support. I would also like to thank more broadly the Law Commission, whose work I think is often undervalued in your Lordships’ House, for the way in which it has picked up and improved many of the suggestions that I made. The Bill has my 100% support except in one serious matter, of which I have given prior notice to my noble friend and which I will return to in a minute.
The underlying principles for my review could be seen as follows. The charities sector has very deep roots—witness the fact that the first recorded charity, the King’s School, Canterbury, was started in 597—and therefore it reflects the very rich and diverse social life of our country built up over hundreds of years. One consequence of that is that it is not neat, and there are those who would like it to be neat. They would say, “Why don’t we just have one cancer research charity so that we can avoid duplication and waste of money?” I certainly resisted that, and I am glad that the Government have, because to do that would drive a stake through the heart of a lot of the voluntary endeavour from which our society benefits. But a consequence is that a lot of charities are pretty small. We need as simple and clear a regulatory system as possible so that charities do not have to go to lawyers and spend a lot on fees to understand what they can and cannot do. I hope that, when the Bill passes, my noble friend’s department will urge the Charity Commission to bring forward user-friendly, understandable advice about the brave new world that we will enter.
My Lords, I declare my interests as in the register. I welcome the changes proposed in this Bill, based on the Law Commission recommendations from 2017. I also pay tribute to the noble Lord, Lord Hodgson of Astley Abbotts, for the statutory review of the Charities Act that he carried out in 2012, and for the very relevant points that he has just raised with the Committee.
As someone who has had a leadership role in charities for many years, I know all too well how much of a burden the legal restrictions are for those trying to manage these organisations. While I welcome the proposed changes in the Bill, I do so with some words of caution as to why we must continue to have a strong legal framework governing how charities operate.
In particular, I wish to draw attention to the extension of cy-près whereby the wishes of a donor to charity can be carried out even if the original purpose of the gift has failed. The Bill proposes to extend these cy-près powers to include donations of £120 or less, or where a trustee resolution has agreed to use the funds for a different charitable purpose. In most cases, the charities would use this money sensibly and for a charitable purpose as close as possible to the original, but experience has sadly taught me that there will be times when this will not be the case. Unfortunately, it is often with small transactions or donations that fraud can occur.
For many years, I was director-general of Age Concern England. Age Concern was not, and is not, one organisation; it is a federation of local Age Concern organisations, most of which operate professionally and play an important role supporting older people in their communities. Every so often, though, in my experience, there would be a rogue element somewhere—in the federation, these things happen. On one occasion, for example, someone involved with an Age Concern local charity had managed to manipulate their partner and unbeknown to them had stolen money from the local charity to build themselves a house with a lot of land. That person was caught and ended up receiving a long prison sentence. As chief executive, I had to travel out of London to where this local charity was based to convince the local police not to publicise the case to the national press. Fortunately, they agreed, for if they had not, the reputation of the national federation would have been undermined by the actions of an individual operating in a local charity.
My Lords, the London County Council’s children’s care committee was not a charity, but all of us were unpaid. Admittedly, that was a long time ago, and it was my first job. I trained subsequently as a VAD nurse and worked with the Red Cross for many years. Of the money raised, 7% was spent on administration—only 7% was allowed in those days. Today’s figures used to be available on the Charity Commission’s website, but they have been dropped. There are substantial amounts being mentioned. The NCVO is the most helpful source of information, if one need to find out more.
I fully support the fact that anyone who does a proper job and works hard should be paid a proper wage. There are more financial responsibilities nowadays; life’s demands are far tougher in today’s market than they were 50 or 60 years ago, and the competition in the market for all levels of work is greater. A few years ago, I asked the CEO of a major charity why he moved from being CEO of charity X to being CEO of charity Y. The answer was simple: “Because they paid more.” I was shocked and saddened. I am not—I repeat, not—including trusts and educational institutions such as the Wellcome Trust or research bodies with investments. That is a totally different story.
Today’s list of charities is so huge and varied and the legal position so diverse and complex, especially in the area of percentage deductions, that perhaps charity law should be revisited further than this Bill. I know that, 50 or 60 years ago, we were a very different country. With the example we have had already from my noble friend Lord Hodgson regarding the Albert Hall trustees, I wonder where it all went wrong.
However, many—indeed most—of the charities in the voluntary sector are staffed by volunteers, who do a job of some sort for no financial gain. I am not seeking to make some kind of moral judgment but simply to draw the distinction. Volunteers are not better than paid workers; indeed, they may be one and the same, in that they have paid jobs but also do voluntary work in their spare time. This is quite normal in Britain and other western democracies.
My Lords, I refer to my charitable interests as outlined in the register, and I would also like to share with the Committee that I have worked with charities for most of my life and have some experience of large ones and some smaller ones. This has informed what I want to say today. I am grateful for the briefings we received, the Library produced a very good note and the NCVO and other organisations pulled together some helpful thoughts.
The Minister said that the Bill is seeking to make a series of changes that will make it easier for charities to navigate the law and carry out their functions effectively while retaining important safeguards. We broadly support what she says on this. The Bill does achieve that, although it has taken a long time to reach the point where we can see it turning into law. I hope that making it easier for charities to amend their governing documents, dispose of land and use their resources more effectively will be a useful change to the work that goes on, day in, day out, across the country in all our various wonderful charities.
However—I think I picked this up from contributions already made—I wonder whether the Bill goes far enough. In some senses, we seem to have the worst of both worlds. We have a relatively weak regulator, which is heavily burdened and not well resourced to do the sort of job it has. It has had, it could be said, a pretty poor reputation in recent years, although it has improved. The Bill is a missed opportunity to rectify some of those issues, but it is wrong to try to change too much in this Bill—we probably do have to wait for another opportunity—but I think we will regret that. The noble Lord, Lord Hodgson, and others have pointed out some of the issues that still need to be addressed.
I have only a few small points to make about the detail, but I think they will be picked up in Committee. I am a bit surprised that we still have a number of different modes of operating charities. This raises issues in itself, although there are one or two that catch the eye more than others. I am referring here to royal chartered bodies, which are also charities. There is a case for considerable overregulation, and it is no longer the case that royal charters are providing the sort of support and ring-fencing they perhaps would have done before. The classic is the BBC, with its royal charter and charitable functions underlying all it does, yet it is subject to regular approaches by Governments of all parties, but primarily Conservative Governments, and does not seem to get the protection that its charitable status might once have suggested. There is nothing in this Bill that would allow us to look at that, but it needs to be picked up at some point as we go forward.
My Lords, I, too, pay tribute to my colleague and noble friend Lord Hodgson for a tremendous amount of work done in probably one of the key areas of our national life. I declare an interest: currently I am a trustee of the Northamptonshire Victoria County History Trust. I am also involved in a whole host of charities in Bedfordshire, where I live, including the Bedford School Foundation—which I founded—and I help a number of trusts in Northamptonshire, where I represented Northampton South for 23 years.
This Bill is really welcome, and I congratulate Her Majesty’s Government. It has been a long time coming. Two Governments did nothing about it, and thankfully the present Government have got a grip of it and decided to move forward. I congratulate my noble friend on the Front Bench on having the privilege of steering it through and the Prime Minister on making sure that the Bill is on the statute book in due course.
Although one welcomes the vast majority of the work that has been done and the proposals, inevitably one looks at the elements that were not accepted by the Government. There is one element that sort of straddles, and that is land. I am a loyal user of my local Church of England church, where my wife was the secretary until very recently. I absolutely agree that Her Majesty’s Government are right to remove the proposal that there should be a requirement for charities not to advertise disposals of designated land. However, I am still marginally confused. I apologise for that, but when one is active in a parish one is very conscious that there are bits of church land that are a bit of a holding, and it is not necessarily easy to remove just a section, particularly on burial grounds. You will quite often find that there is an old burial ground and different bits of land belonging to other owners, which are already agreed in principle to be an extension of a burial ground. I just raise that issue, because I think it is important.
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Clauses 9 to 14 concern the use of permanent endowment. The Bill will open up more opportunities for trustees to exercise flexibility in making decisions that are in the best interests of their charity, allowing them to utilise their permanent endowment better and make social investments, while protecting the enduring nature of such funds. The Bill creates a clearer definition of permanent endowment and a new power for trustees to borrow from their permanent endowment, and it streamlines the existing power available to trustees to release those funds.
Clauses 15 and 16 concern ex gratia payments, which are payments that trustees want to make morally but cannot make legally. The Bill allows charities to make relatively small payments without seeking Charity Commission authorisation. It also reframes the test so that trustees, if they want to, can delegate the decision to make these payments to the charity’s staff.
Concerning land transactions, Clauses 17 to 24 will remove ineffective and disproportionate statutory requirements around disposals of land by charities, create a simple process for ensuring compliance with statutory requirements and pave the way for secondary legislation to broaden the pool of advisers at trustees’ disposal.
Regarding inappropriate charity names, Clauses 25 to 28 expand the Charity Commission’s powers in respect of misleading, offensive or very similar charity names to remove anomalies and prevent an inappropriate name appearing on the register of charities.
Charities could not function without the vital role of trustees. In Clauses 29 to 31, the Bill allows charities to source goods from trustees, subject to safeguards, removing a gap in the current law. It also enables the Charity Commission, in limited circumstances, to authorise trustees to be paid for specific work that they have carried out for the benefit of the charity.
In relation to incorporations and mergers, Clauses 32 to 35 save administrative costs by ensuring that legacies in wills can be transferred to a merged charity and by automatically giving trust corporation status to corporate charities in their capacity as trustees of charitable trusts.
On charity tribunal costs, Clause 36 provides protection for trustees to avoid charities being discouraged from pursuing litigation because of the risk of having to pay the costs of proceedings personally.
The Bill contains further provisions to modernise language and to rationalise the Charities Act 2011.
All benefits I have described have been carefully balanced against the need for proportionate regulatory safeguards. We have worked closely with the Charity Commission, which will benefit from the removal and reform of unnecessarily lengthy or complex processes.
Although not a provision in the Bill, the Law Commission’s 2017 report recommended that the Government periodically review all financial thresholds in the Charities Act 2011 with a view to increasing them, by secondary legislation, in line with inflation. The Government have accepted this recommendation and agree that such a review should take place at least every 10 years and, subject to resources, we will aim to undertake a review of the financial thresholds in 2022. I can confirm that thresholds in relation to permanent endowment and failed fundraising appeals will be included in the review.
The Bill will have a positive impact on all charities, large and small, with the greatest benefits felt by small charities, for which administrative burdens and legal and professional costs are likely to be most prohibitive and disproportionate. Other than financial savings, clarity in the law will help trustees to act with confidence in their charity’s interests. Removing unnecessary layers of regulation and administrative burdens enables charities to function more effectively. In turn, we anticipate public trust to flow from charities working unhindered and able to focus fully on their charitable mission.
In closing, the Bill plays a key role in our efforts to support the charity sector. Through the valuable work of the Law Commission, those who work in charity law every day have shone a spotlight on the particular processes that drain their resources away and distract from their charitable purposes. In providing clarity and consistency in the legal framework, charities can be confident that we are here to make their paths clearer and simpler. We continue to be immensely grateful for all their work.
I hope that the Bill receives strong support from your Lordships, and I look forward to your contributions in this debate. I beg to move.
Charities should also be responsible for declaring what funds are used for and whether any funds are over or cannot be used for what they were raised for. This is a really important issue that should be on charities’ websites. It is also important that charities have websites—they know that they have to—with all their funding, staff, et cetera.
The Minister knows that I have a view about the future of charity boards, as we discussed at one point during an Oral Question. I hope that, not through this Bill but through other legislation, we will look at corporate governance as we come out of Covid for charity trustees and how that should operate along the lines of company boards et cetera.
While these changes are really very welcome, it would be helpful to know what steps the Government will take to grow the levels of giving and philanthropy in this country. Increased giving can help charities adapt to changing circumstances brought about by the pandemic, but giving will not grow spontaneously. To build on the necessary changes in this Bill, the Government need to find ways to mobilise greater giving. It would be helpful if the Minister could take forward the need to increase giving and say what steps are being taken to increase giving along with these changes.
Thirdly and finally, as background, I argue strongly that whenever in the past people gave money to charities they did so to put it to work; they did not want it stuck in a bank account on some technicality. We have to find ways to make sure that the structure remains up-to-date with modern conditions.
Against that background, what are my top picks from the Bill? First, as my noble friend said, there is the commitment to a quinquennial review of financial thresholds, without which they will rapidly become of little value with inflation, and in particular applying them to the permanent endowment figures of £25,000.
Hurrah for the simplification of the procedures for selling land. I was quite astonished to find that a charity selling land is bound by all sorts of procedures, but a charity buying land, which by definition must be just about as dangerous, had almost no procedures and prohibitions at all.
Hurrah for relaxing the rules on permanent endowment so that more money can be put to work, for the reasons that I have explained.
Hurrah for simplifying the merger regime, in particular the rules that my noble friend mentioned around bequests. It was astonishing how many charities that had merged still had to be kept in existence because they still anticipated some future bequests and legacies.
Hurrah for the changes to the rules regarding failed, or indeed overly successful, appeals, with charities spending a long time trying to find people who had donated money because the appeal had got either too much or not enough money. That was a complete waste of time. People almost certainly did not want the money back. There are limits in the Bill, and I am sure that is right.
Finally, hurrah for some loosening of the way that trustees can be reimbursed for their real efforts.
Those are my top picks, but they take me to my really serious concern about the Bill. I imagine that most Members will think of the Charity Commission as the all-powerful regulator of its sector. I certainly did before I began my review. In fact, it is not. Its ultimate power is subject to the permissions of the Attorney-General. Under Section 325 of the Charities Act 2011, if the Charity Commission faces
“A question which … involves … the operation of charity law in any respect”,
it can appeal to the Charity Appeal Tribunal for a ruling
“only with the consent of the Attorney General.”
This is, I submit, an extraordinary position for the sector regulator to find itself in. It is as though one of the financial regulators, seeking a ruling on a point of law, had first to go to the Treasury to get the go-ahead. People would think that an extraordinary restriction on a regulator’s independence and power, and so it is.
I recommended that the commission should be free to appeal to the tribunal but that it should have to inform the Attorney-General of the action that it was taking. The Law Commission supported that proposal. The Government have turned it down. Therefore, the Bill as drafted means that the Charity Commission remains in the last resort under the sway of the Attorney-General.
However, this in-principle defect is made worse—far worse—by the real-life performance of the Attorney-General’s duties. I refer to the case of the Royal Albert Hall, which is a Victorian charity built in the 1880s by public subscription. It is one of London’s great cultural venues, being home to the Proms and so on. As part of the original financing, subscribers were offered seats in the hall in perpetuity. The original idea was that, on the nights that the holders did not wish to attend, they could sell their seats to the Royal Albert Hall box office for face value, less a 10% handling charge.
A few years ago, seat-holders decided that they could sell their seats much more profitably through a third-party website, so today seat-holder tickets for an Eric Clapton concert next year, with a face value of £175, are on sale through viagogo at £946—a short £800 uplift or, in the words of a television sitcom, a nice little earner. It will come as no surprise that, pre pandemic, seats were allegedly earning £10,000 to £20,000 per annum and are changing hands for more than £150,000 each. As I said before, the Royal Albert Hall is a charity and, as such, has a board of trustees. There are 24 of them, but 19 are seat-holders—80% of them. I have no objection to seat-holders seeking to enjoy their private property; that is one of the provisions of the European Convention on Human Rights. But when a seat-holder becomes a trustee, a conflict of interest must surely arise.
It was on this point of a conflict of interest that the Charity Commission sought a legal ruling for which, under the present law, it had to obtain the Attorney-General’s permission. The original application to the Attorney-General was made—wait for it—in August 2017. Four years later, we are still waiting for a decision from the Attorney-General as to what the Charity Commission can and cannot do.
In the meantime, I understand that the commission has tried to engage the trustees of the hall and suggested that, if a majority of the trustees were not seat-holders—for example, 13 out of 24—that would be a satisfactory compromise. The trustees rejected this proposal and, in a letter dated 27 April this year, the chairman of the RAH Seatholders Association described the purpose of that association, which was set up only last year, as being “to protect members’ interests from the very real threat posed by the Charity Commission”. These are strange words to use about your sector regulator.
To conclude, I stick to the proposal made in my report and supported by the Law Commission that the Charity Commission should be free to approach the tribunal for rulings on a point of law, but that the commission should be required to tell the Attorney-General that it was so doing. This is otherwise an excellent Bill, which has my enthusiastic support, but in my view we need to discuss and amend Section 325.
These stories are fortunately rare, and in this case the person responsible was caught and the money was recovered, but it illustrates why we need strong legal frameworks regulating how charities operate. While having to comply with the Charities Act is often cumbersome and time-consuming, having these sorts of rules governing charities reduces the risk of this type of fraud, so while I support the Bill and the changes it recommends, I do so with the warning that legislation and safeguards about the way that charities are run are often strict for good reason. We lose them at our peril.
Nearly half of the British adult population are volunteers—roughly 48%, or 22 million people. Let me give your Lordships a few examples: helpers in health centres; recently retired doctors, some spending up to eight hours a day giving Covid jabs; fundraisers; lifeboat crews; local government councillors; judges; members of non-stipendiary magistrates’ courts; church wardens; choirs; bell-ringers in parish churches; Samaritans; prison and hospital visitors; and chancellors of universities. The list is endless. They are people who wish to help others less fortunate than themselves. They wish to do their civic duty. They care.
Alongside those 22 million volunteers, many of your Lordships have worked for various charities all your lives. I admit that I was lucky enough to be in a position to do so too. Like my noble friend Lord Hodgson, whose review I very much recommend, I was president of the National Council for Voluntary Organisations—a fine organisation. But what do the NCVO, the Charity Commission and all those generous people who donate their money have to say regarding the alleged percentage that some charities pilfer yearly from the kitty?
I repeat my question: why do so many so-called charities need to spend this X per cent? It is no doubt more than the 7% that I mentioned earlier. This hard-raised money is possibly being spent on overheads and administration, rent, organising events and salaries. The figures should be transparent and easy to access and check. We all know why they are not, as it is much easier to spend somebody else’s money. I fully support the cy-près powers suggested in the Bill and the Bill itself.
I urge the Minister to find a way, in the Special Public Bill Committee, that my argument and its spirit be included in this Charities Bill.
The second point is on fundraising: the Bill does a good job in introducing greater flexibility for charities with regard to fundraising appeals, the way the Bill sets out what happens if a fundraising appeal is either too successful or too unsuccessful will help move forward and cy-près has already been mentioned by a number of speakers. However, the supporting documentation states that there is a need to monitor the process going on here, and we may have worries about how this is going to operate in practice. I could not see how that was going to be done in practice. I wonder whether when she responds the Minister could mention that and explain what is intended.
Enough has been said on permanent endowments; I do not need to go into that. The power to use permanent endowments to make social investments is a really important change in the way we are going forward, and others have mentioned that as well. The new power moves a long way towards where most charities would want to be, which is not being tied to the value-for-money constraints that have so often bedevilled what they have wanted to do, but it does not go far beyond where they might want to get to. It does not go further down that line, in the sense that it does not raise too many dangers. Monitoring will be important here, and, again, it would be useful if the Minister could respond on that point.
I have a very minor point on ex gratia payments: when I read the Bill the first time, I was a little struck by what exactly is going on here, and I still do not quite understand the argument that says this allows charities to honour moral obligations. I do not think moral obligations feature in much of the law of the land. Morally, we are probably wanting to do lots of things, but we are restrained by the law of the land and other conventions. Again, when she comes to respond, could the Minister explain where this fits into the great scheme of things, perhaps giving us some examples of where moral payments might be a useful addition to the range of things for which trustees have responsibility? I am not against it in principle; I am just a bit confused about where it will take us in the great scheme of things.
On the payment of trustees, if I recall correctly, the original report by the noble Lord, Lord Hodgson, called for quite a radical change here: that the professionalism that could come from paying trustees should be considered. It is not in this Bill, and indeed was not accepted by the Government, but it is an important issue and should not go away. Payment for goods provided by trustees to their charities, where that is properly protected, above board and perfectly transparent, must be perfectly acceptable. There is a broader question about whether or at what point we should professionalise trustees and their role, particularly in the bigger charities. A charity with which I am involved is based in America and regulated under its rules, and there it is perfectly normal for trustees of charities to be paid and, indeed, for the chief executive of the charity also to be a trustee. It is a bit of a shock if you come from the British system and work on the American system. I am not saying that I necessarily think it is the right thing for all charities, but if it works well in one country—one territory—and serves the purposes of what they achieve by charitable objectives, it may be worth looking at.
Finally, on the issues that were rejected by the Government, even though they were accepted by the Law Commission, the noble Lord, Lord Hodgson, has made a good case about seeking the permission of the Attorney-General. I look forward to seeing that when we come to Committee and to supporting him if he chooses to table an amendment in the way he has suggested.
On Clause 12 on borrowing from the permanent endowment, I understand why charities have to borrow. It is not a good thing on the whole but, if they have to borrow, I understand why. I was chairman of a friendly society, and from memory it had a very strict rule on the percentage of borrowing. It was not left the least bit vague, and I suggest to Her Majesty’s Government that it should be quite clear, in black and white, what the percentage is and not as a general rule.
On the charity tribunal rejection, we can perhaps look at this again in Committee, but Recommendation 40 of the Law Commission review argued that it should be possible for authorisation for charity proceedings under Section 115 of the Charities Act 2011 to be sought from the court or the Charity Commission where the commission had an apparent or actual conflict of interest.
As far as I understand it, the whole of the charitable movement is supportive of the Law Commission’s suggestion because it would provide reassurance for those seeking authorisation and ensure that the Charity Commission is not suspected of using authorisation for reasons not to do with the merits of the proceedings. We only have to look at what is happening in society at the moment with statues being thrown into the Bristol docks, and others being pushed over and destroyed, to see that life in our world is changing and that somebody—it may well be the Charity Commission—needs to get a grip of those elements.
I raise one specific issue; it is much more relevant for Committee than here. I have been approached by the Spilsby Grammar School Foundation on its attempt to update its constitution. It is not appropriate to go into it in detail now but I hope that my noble friend on the Front Bench will accept some representations from the trustees and their lawyers, Sills & Betteridge, rather than me going into detail now.
I conclude by reflecting for a second—as this is a Second Reading—that gift aid, which is the foundation of much of the money that comes in to our charities, was introduced by John Major on 1 October 1990. Today, it is the world’s greatest charitable tax relief scheme. That is a major achievement for any society. It is worth well over £1 billion in tax relief and represents around 6% to 7% of voluntary income. I also pay tribute to Gordon Brown. He extended gift aid so that smaller donations would be eligible. That in itself is a great tribute.
I have just a final thought. I received in my email this morning a briefing on the social care Bill. I declare an interest as I am married to a doctor and we talked today over breakfast about whether there is a possible opportunity in that area in life to produce the equivalent of the gift aid scheme for social care. I am a marketing man and discussed this only briefly over breakfast so I have done no real deep thinking on it, but I am putting down a marker: I think there is an opportunity there.