Royal Albert Hall Bill [HL]

Third Reading

Amendment

Moved by

After Clause 4, insert the following new Clause— “Restrictions on powers to exclude members(1) No power exercisable under section 4 has effect unless—(a) it is approved by a sub-committee of the council of which the independent members of the council will form a majority; and (b) an undertaking has been given by all members who are trustees that any tickets for seats received from the exercise of the power to alter the number of events from which seat holders are excluded must only be sold by the trustee or relatives of the trustee through a ticket return scheme operated or approved by the Corporation.(2) In this section “relative” means in relation to any person any of the following―(a) that person’s spouse;(b) that person’s civil partner;(c) any brother, sister, aunt or uncle of that person or of that person’s spouse or civil partner;(d) any lineal descendant of that person or of a person mentioned in paragraphs (a) to (c).(3) In this section “trustee” means a member of the Council of the Corporation of the Hall of Arts and Sciences.”Member’s explanatory statement This is to ensure that any power to exclude members from the Hall can only be exercised when approved by a sub-committee of which the independent members of the council form a majority and that any tickets for seats received as a result of the changes proposed in the Bill may only be sold through a ticket return scheme. This is because of the potential conflict of interest of the charity’s trustees. In the absence of this provision those seat holders, who are also trustees and so control the Hall, are able to resell tickets made available to them through third party websites at above the face value of the tickets.

My Lords, I am very grateful to the noble and learned Lord, Lord Etherton, the noble Lord, Lord Bassam of Brighton, and the noble Baroness, Lady Barker, for putting their names to this amendment, as well as to a number of other noble Lords from across the House who signed the circular distributed to all Members of the House explaining the background to it. It will not have escaped the attention of your Lordships’ House that each of the signatories is from a different party grouping. I want to make it clear at the outset that there is no party-political angle to this issue. The amendment is about compliance with charity law.

Before I go any further, I need to clear up one extraneous matter of a personal nature, which I expected would be raised by the promoters, who have done so in a carefully worded paragraph XVI of the additional briefing that they have circulated. The opening sentence reads:

“The Hall expresses regret that the amendment is aligned with an agenda pursued by a disaffected President of some 14 years ago … He has waged a campaign against the Hall”.

The disaffected president is called Richard Lyttelton, and it has been a long-standing objective of some of the defenders of the status quo at the Royal Albert Hall to attempt to discredit and undermine my work by alleging that I am a close friend of the Lyttelton family and merely a mouthpiece for Richard Lyttelton.

The facts are these: over 50 years ago—not 15, 50—I was a friend of Richard Lyttelton’s elder brother, Johnny. Johnny was six or seven years older than Richard—a significant gap when you are in your 20s —and I had no dealings with him then. My friendship with Johnny regrettably came to an end when, as a result of ill health, he went to live permanently in Spain and died early, in his 60s, sadly. Forty years passed without my having any contact with the Lyttelton family. It was only about a dozen years ago, when I undertook the official review of the Charities Act for the Government and learned about the interplay between the Attorney-General and the Charity Commission, and, subsequently, its implications for the Royal Albert Hall, that I came across Richard Lyttelton again.

It will not escape the notice of your Lordships’ House that it is the council, 80% of whose members are seat-holders, that ultimately decides the split between inclusive and exclusive lettings. At present, that split is governed by Section 14 of the Royal Albert Hall Act 1966. It is admittedly complex, and the promoters of this Bill wish to give the council more freedom. Clause 4 of the Bill before us achieves this by allowing the council, or not fewer than 20 members, to propose changes. These changes have, in turn, to be approved at a meeting of seat-holders by three-quarters of those present or voting by proxy. It is, as put in the explanatory notes circulated by the hall, a permissive amendment.

My amendment would insert a new clause in the Bill. It does not in any way impact the rights of seat-holders generally. However, if you are a seat-holder and a trustee—a member of council—you are in a special position because of your ultimate decision-making power. If the council decides that it needs more freedom in setting the balance between inclusive and exclusive lets, so be it, but the use of this power needs to pass two further tests. First, any changes proposed under the new provisions need to be approved by a sub-committee of the board of which independent members form a majority. This is provided for in proposed subsection (1)(a). Secondly, as regards seat-holding trustees or council members—or their families—any tickets resulting from the use of the power can be sold back only through the hall box office via the TRS. They cannot be sold in the open market. The trustee will then get back the face value of the ticket but will not be able to make potentially super-profits—super-profits which will have arisen as a result of the decisions for which they were ultimately responsible. That is the purpose of proposed subsection (1)(b).

Finally, private Bills undergo a special procedure involving outside examination. First, the Attorney-General in the last Conservative Government—this Bill began its proceedings before the general election—whose letter of 18 April has been circulated, said:

“It is widely acknowledged that the constitution of the Corporation … gives rise to a potential conflict of interest between the private interests of seat-holding trustees and the corporation’s charitable objects … I therefore regard the bill as a missed opportunity to effect meaningful change”.

Secondly, the report of the cross-party group of Peers, Members of your Lordships’ House, chaired in this case by the noble and learned Baroness, Lady Hale of Richmond, concluded in paragraph 12:

“The Royal Albert Hall plays an iconic part in the life of the nation and there is a strong public interest in ensuring that its governance arrangements are consistent with its charitable status”.

Finally, and most importantly, the chief executive of the Charity Commission, the sector regulator, wrote to me on 10 January—that letter has also been circulated —stating:

“I am supportive of the principle underlying the proposed amendment—to address the potential conflicts of interest insofar as they relate to the exercise of the new power in Clause 4”.

To conclude, there is nothing sinister in what is proposed in this amendment. It does not attack the hall itself; it does not attack the rights of seat-holders; it does not even prevent seat-holding trustees receiving the face value of their tickets via the TRS. It merely begins a process or bringing the governance of the hall into line with modern charity law. I beg to move.

My Lords, I rise to support this amendment, to which I have added my name. There are four fundamental legal principles which show the need for this amendment and why it should be supported by the Members of the House. Section 1 of the Charities Act 2011 states:

“For the purposes … of England and Wales, ‘charity’ means an institution which … is established for charitable purposes only”—

the emphasis there is “only”. Before that well-established proposition of law was incorporated in statute, lawyers would refer to the need for the institution, if it is to be a charity, to be wholly and exclusively charitable.

Secondly, Section 2 of the Charities Act 2011 says that a charitable purpose is a purpose which is “for the public benefit”. Sadly, the present position does not satisfy these two fundamental requirements, because the management structure of the Royal Albert Hall enables a sizeable group of seat-holders, which as we have just heard amount to the owners of some 25% of the seats in the hall—and they are the best seats—to potentially earn huge private profits for themselves from the performance of the charitable objects of the hall.

We all wish the Royal Albert Hall to be a thriving charity, enjoying all the fiscal benefits of charitable status. To maintain that status, however, requires, for the reasons I have briefly summarised, a radical change in the management of the hall so that it becomes, to all intents and purposes, a corporation wholly and exclusively charitable, operating solely for the public benefit. That is enough to warrant the amendment now being considered, but the matter goes further and concerns the legality of the role of the seat-holder council members.

The members of the Albert Hall council are charity trustees because they have

“the general control and management of the administration”

of the hall. That is the test laid down in Section 177 of the Charities Act 2011. As charity trustees, they are in the same fiduciary position as any other trustees: they must exercise their powers in good faith and as would most likely further the purposes of the hall. Their powers must be exercised for the purpose of advancing, directly or indirectly, the public benefit.

Furthermore, in accordance with the ordinary principles relating to fiduciaries, each member of the council, as a charity trustee, is not permitted to put themselves in a position where their interests and their duty conflict or may conflict. The majority of the council members of the hall are seat-holders, who face an obvious actual or potential conflict of interest and duty in exercising their powers under Clause 4. These are the reasons why the amendment introducing a committee, the majority of whose members are not seat-holders, to state whether it approves or disapproves of decisions by the council under Clause 4 is not only desirable but essential for maintaining the charitable status of the hall and the observance by the council member seat-holders of their legal duties.

My Lords, I am more than happy to be a co-signatory to this amendment. In agreeing with it, I want to make it plain that I bear the Royal Albert Hall, an iconic national and international institution, no malice or ill will. Who among us has not been to the Royal Albert Hall to enjoy its performances? I think I first went there at the age of 17, when I watched a rock band where the principal singer and flautist stood on one leg. They were called Jethro Tull; some noble Lords may have seen them. My family’s link with the Royal Albert Hall is not just that; my mother must have attended some 20 remembrance services on the trot, as a proud servant of the Royal British Legion, in her finery and uniform.

This amendment gets to the heart of the issue. It deals directly with the conflict of interest which the noble Lord, Lord Hodgson of Astley Abbotts, has so expertly outlined. To his great credit, he has fought this fight for a very long time and has brought a group of us together in support of his position. It is a scam and an outrage that the current situation persists. So far as I am concerned, I might describe it, indelicately, as an operation which involves ticket touting for posh people—certainly, very rich people.

We need to sort this out because it is wrong. It excludes ordinary members of the public from enjoying the benefits and delights of the Royal Albert Hall, because the tickets that then go on sale from the box owners are at a premium price. The noble Lord has given one very good example concerning Ed Sheeran. That is not right. Those tickets should be returned to the institution itself and go on sale to the general public, so that they can enjoy the pleasures the hall provides.

The other point is simply this: the Royal Albert Hall itself derives no benefit from those ticket sales, and that cannot be right. That hall, like any other, requires upkeep, maintenance and conservation, and it is a very expensive venue to preserve. I would like to think that, at the end of this process, ticket sales will make a direct contribution to the preservation of what is a fine institution. With those few comments, I am more than happy to support the amendment.

My Lords, I apologise for being momentarily late, and point out that I have to chair the Grand Committee at 5.15 pm, so I hope that our deliberations will have concluded by then. I also declare my interests as set out in the register: I own a management consultancy that specialises in advising charities about governance, management and strategy.

This debate has taken me back to two weeks in my life when I enabled groups of trustees to set up trading companies at a moment’s notice, because the Inland Revenue had suddenly discovered that various Age Concern shops were selling balls of wool to pensioners for the grand profit of a penny a ball. We probably made a total of about £20,000 over the whole country, but it got the guys at the Inland Revenue very excited at the time, and we had to change our approach.

I say that because every charity in the land, bar this one, that has a formal relationship with a company has to declare it. If it is a sufficiently close and significant relationship, it has to produce group accounts. The whole purpose of that is to show the interactions and the transfer of assets between the charity and the company, in order that members of the public can be sure that charitable assets are not being abused for private gain—every other charity but this one.

What we have heard already in the speeches so far, which I will not repeat, is that, because of historical accident, this charity is now at risk of being abused for private gain. A few years ago, the Charity Commission attempted to head off that situation by proposing a governance structure that would address the conflicts of interest as set out by the noble and learned Lord, Lord Etherton. The Royal Albert Hall’s response has been not just to ignore that, but to compound in the Bill it has introduced the very problem that has been drawn to its attention. Therefore, we would be wrong to pass the Bill without this amendment, which seeks in a very modest way simply to do what other charities have to do as a matter of law.