Editorial: New rules on public benefit face first test in the case of Odstock

Barely a week into the year, it is already looking inevitable that the vexed question of fee-charging charities and public benefit will be one of the dominant themes for the voluntary sector in 2008.

Stephen Cook
Stephen Cook

The Charity Commission is expected to produce the final version of its general guidance on public benefit by the end of this month, and that will be followed by consultation and more detailed guidance on four sub-sectors, including fee-charging charities such as private schools and hospitals.

Running parallel to that process, however, are the developments concerning the commission's decision towards the end of last year to refuse charitable status to Odstock Private Care, which was set up in Salisbury to treat private patients and funnel the proceeds into local NHS healthcare. The decision seems almost to be designed as a trial run of the commission's attempt to solve the problem the Government shirked in the Charities Act 2006 - reinterpreting the somewhat whiskery case law on fee-charging charities in the light of modern social conditions.

Although the landmark Privy Council case from the 60s says that fee-charging organisations can be charities providing the poor are not wholly excluded, the commission has plumped in its draft guidance for the formula that "people on low incomes must be able to benefit". Odstock has fallen foul of that formula, which seems unlikely to be changed in the imminent final version of the commission's guidance, and already there is disagreement about the decision among senior charity lawyers, as our news analysis explains.

There are detailed and persuasive arguments on both sides and, in the light of the unwillingness demonstrated by the legislature to grasp this particular nettle, the best course now is surely to get the matter in front of some of the country's most senior judges as soon as possible. With luck, the courts will come up with a ruling and a set of principles that will put things beyond argument - at least for the time being - and bring back down to earth a question that has been up in the air for much too long. Then everyone can see where they stand and we can all get on with our lives.

It is unfortunate, in the circumstances, that the new Charity Tribunal established by the 2006 act is still in the process of being set up. The tribunal is intended to make it easier and cheaper for organisations to challenge decisions by the commission, and will allow for the Attorney General, acting as the protector of charity, to bring cases before it. Both the attorney and the commission itself will also be permitted to refer questions of charity law to the tribunal for clarification. The Odstock case would be a casebook example of a candidate for examination in this new tribunal.

Because of the timing, however, any appeal by Odstock Private Care would have to take the traditional route of appeal to the High Court, which is cumbersome, expensive and time-consuming in comparison with the new tribunal. And, as far as expense is concerned, would it really be appropriate for a healthcare organisation and a cash-strapped commission to bear the costs of a case with such wide and obvious public interest? If the appeal is lodged, perhaps the Legal Services Commission could consider it under its funding code as a candidate for legal aid.

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