NEWS IN FOCUS: Law reform underway via lobby group consultation

Mathew Little

'Pre-legislative scrutiny' with wide consultation and possibly many amendments is on the cards for the reforms to charity law. Mathew Little outlines a progress report on the long-awaited draft charities bill

The Charities Bill Coalition was handing round the cigars last week when the Queen announced that draft legislation to reform charity law is to be introduced during 2004. The proposals include 12 new charitable purposes, public character tests, a new legal form for charities, and reserve powers for the Home Secretary to regulate fundraising.

But the road to royal ascent will be a long one with the Government committed to the relatively rare process of pre-legislative scrutiny - opening up the bill to amendments by pressure groups and the public before it is put before Parliament.

The inevitable delays caused by this process could create a domino effect.

If a general election is called as expected in the first half of 2005, the bill may fall by the wayside. Controversy could also flare with Labour MP George Foulkes intending to table amendments to end charitable status of private schools.

Pre-legislative scrutiny is part of Labour's attempts to modernise House of Commons procedures. When he was Leader of the House, Robin Cook wanted all bills to be considered in draft form before being formally presented to MPs, in order to iron out any flaws or technical problems. In practice, the process has so far been limited to less partisan pieces of legislation.

The bills can be considered either by a select committee of the House of Commons or a joint committee of both Houses. Pressure groups and other outside bodies can influence the content of bills by giving evidence to these open committee sessions that can last up to three months. In some cases, the public can have a say through an online consultation.

There is wide support for pre-legislative scrutiny of all bills. Pete Moorey, Parliamentary officer at NCVO, describes the format as a "round-table, more discursive environment". He says: "Outside bodies will be much more involved in the process than they would be if it moved straight to the Commons."

Issues of contention

There will be an opportunity to make changes to the content of the bill.

The Strategy Unit report, on which the charities bill will be based, was widely supported by the sector. But there was disagreement between the Government and charities on issues such as whether charities should be allowed to trade without forming a separate company and whether charities with income below £500,000 should be exempt from the requirement to have their accounts professionally audited. These topics could be revisited during pre-legislative scrutiny.

The Charity Finance Directors' Group says it wants to make it easier for charities to carry out commercial activity by raising the minimum threshold above which they cannot trade without forming a subsidiary.

"We don't want to derail the bill but we do want to push for some relaxation of the rules," says policy and campaigns assistant Sophie Chapman.

But pre-legislative scrutiny is bound to delay the passing of the bill.

After that stage, the bill must still go through all the legislative stages in Parliament, including three readings in the House of Commons. "This could significantly add to the length of time it takes to get the bill through," says Alex Brazier, senior researcher at the Hansard Society.

He estimates: "If pre-legislative scrutiny begins in late winter or spring 2004, the bill won't be introduced until the Queen's Speech 2004 and will take a year to go through."

Such a scenario could see the bill killed by the timing of the next election, if Tony Blair conforms to predictions and dissolves Parliament early in 2005. Charity reform will not be lost because all main parties support it, but the 400-year wait for reform will be further extended.

The passage of the charities bill could also provoke a confrontation between the values of old and New Labour. Former minister George Foulkes is determined to remove the charitable status enjoyed by fee-paying schools, and says he has support among Labour MPs. He is certain to use the pre-legislative stage to table amendments to the bill to change its provisions on the definition of charity and public benefit. "We will pursue any opportunity to take away the charitable status of private schools; either via a private members bill or amendments to the charities bill," he says.

The attempt will certainly add colour to the proceedings, inevitably prompting a rearguard action by the public school lobby, but the Government is unlikely to make concessions beyond requiring proof of public benefit.

In fact, the main elements of the charities bill seem destined to remain intact. Last year's Communications Bill went through pre-legislative scrutiny, but the Government shunned recommendations by the joint committee of both Houses, which was chaired by film producer and peer David Putnam, to change provisions on media ownership.

Democracy at work

Julian Petley, co-chairman of the Campaign for Press and Broadcasting Freedom, gave evidence to the committee and says the process was worthwhile.

"It was extremely useful. You really saw democracy at work. David Putnam's committee scrutinised the bill extremely well and used a wide range of sources," he says.

"But on the really substantive matters the Government ignored the committee's recommendations. On big things like stopping a newspaper group from owning Channel Five or stopping non-EU firms owning TV companies, the Government was determined not to give way. It was a very good exercise but it had its limits. The ideological nub of the bill was left untouched."

The campaign was invited to give evidence because it had submitted a response to the White Paper. And despite the probable limitations, Petley advises charities to take part if they can. "If you can get involved in the process, either through giving evidence or through the online consultation, definitely, definitely do it," he says.

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