The Queen’s Speech on 17 May 2005 contained the welcome news that the Government would re-introduce the Charities Bill, after it was “timed-out” following the dissolution of Parliament on the calling of the General Election.

The House of Lords debated the re-presented Charities Bill at great length during the Committee Stage, with the second reading heard in the House of Lords before the summer recess. The Bill is now set to enter the Report Stage and a date has been provisionally scheduled for 12 October 2005. The Government is currently considering a number of amendments discussed at Committee Stage and it is hoped that the Bill may receive Royal Assent before Christmas (depending on the debates held in the House of Commons).

The key changes to the draft Bill include:

Future Role of the Charity Commission

A move to support a wider role for the Charity Commission (“the Commission”) was narrowly defeated. The amendment proposed giving the Commission an additional duty of “facilitating development and innovation in the charitable sector” and was in line with the Commission’s own plans to extend its remit well beyond that required to fulfil its regulatory functions. The amendment was defeated since it was felt that the Commission had sufficient responsibility in terms of fulfilling its existing obligations without taking on new ones, but the decision could still be reversed.

Powers of the Charity Commission

In the final day of the debate, there were a number of amendments that sought to clarify and limit the powers of the Commission when it came to making formal inquiries and appointing receivers and managers under sections 18 and 19 of the Charities Act 1993. A receiver and manager (now sensibly to be known as an “interim manager”) is appointed as a protective measure to take temporary control of an ailing charity. Generally, charities are only placed under the control of a receiver and manager when their trustees are unable or unwilling to address serious concerns about the way in which the charity is being run. During the debate, calls were also made for greater assurances about the rights of trustees whose charities are under investigation.

Public Benefit Test

The public benefit test, and in particular the issue about when organisations charging high fees could be charitable, has again been rehearsed at length, though inconclusively. Meanwhile a much stronger 'public benefit' provision has been adopted into law in Scotland than that being discussed here.

It is likely that when the Bill reaches the House of Commons there may be moves to make amendments in the same direction. Lord Phillips of Sudbury has proposed an amendment requiring the Commission to consider the extent to which the fees being charged affect public benefit. Conversely, the Directory of Social Change are not confident that the proposed amendment goes far enough in terms of dealing with the issues and have asked that the Scottish approach be considered instead, even if in a less rigorous form.

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