News in focus: Race against time for Charities Bill

The Charities Minister has rejected a key recommendation of the scrutiny committee, says Stephen Cook.

Last year was a rollercoaster ride for the Charities Bill, especially when Alan Milburn, then chairman of the Parliamentary committee scrutinising its draft version, homed in on disagreements about defining 'public benefit' and famously declared things to be "a dog's breakfast".

It remains to be seen whether 2005 will be equally exciting for the real Bill, which was introduced in the House of Lords just before Christmas and is now in a race against time to reach the statute book before the General Election, which is widely expected to be in May or June.

The litmus test will be whether voluntary sector minister Fiona Mactaggart has succeeded, in the aftermath of the scrutiny committee's interventions, in turning the dog's breakfast into a dish that those with doubts about her public benefit formula will find sufficiently palatable.

It looks as if Mactaggart might have an interesting fight on her hands because she has turned down the committee's recommendation either that a framework definition of public benefit should be included in the Bill or that non-binding ministerial guidance on the subject should be issued.

Policing responsibilities

Instead, she has stuck to her guns - and followed the wishes of most voluntary sector representative bodies - by insisting that there will be no such definition or government guidance and that public benefit will, after consultation with the public, the sector and the Government, be defined and policed by the Charity Commission.

Mactaggart's argument is that a framework definition in the Bill, usually referred to as 'non-exclusive criteria', could too easily become the only criteria, and that guidance from ministers could contain inadvertent political bias. "There is merit in keeping us politicians out of this," she insists.

One potential problem in her approach is that many still consider the commission a flawed and inefficient organisation, and it is worth remembering that the bumpiest moments of the rollercoaster ride came in the aftermath of a commission statement about how it thought public benefit could affect fee-paying schools.

The statement said, in effect, that case law had established that independent schools do provide public benefit even if they serve only the rich, and that only a new, statutory definition of public benefit would make it necessary for them to provide any further justification of their charitable status and attendant tax breaks.

Mactaggart's subsequent assertion to the committee that Home Office lawyers took a different view to those in the commission prompted Milburn, grandstanding his way to his latest Cabinet job as Labour's election supremo, to produce his remark about the dog's breakfast.

A scurrying of lawyers between the Home Office and the commission produced a 'concordat' saying both sides were confident that case law showed a school could be a charity if only the rich could afford it, but not if it also "wholly excluded poor people from any benefits, direct or indirect".

This is now the basis on which the Bill is going forward, and sceptics are bound to wonder firstly whether commission lawyers, who produced the original statement, have really changed their minds; and secondly, how robust it will prove to be if the commission denies charitable status to an independent school and a QC steeped in arcane case law gets up to present an appeal to a public school educated judge.

Mactaggart is therefore putting a great deal of faith in the ability and determination of commission chairwoman Geraldine Peacock to transform an organisation with a reputation as a graveyard for the civil service into a dynamic, modern outfit capable of defining and defending a concept of public benefit.

Does this mean that the Bill is in serious danger? Probably not. It has general cross-party backing, its potential opponents on the Labour benches are few and, if the Conservatives go on the attack, the subject is unlikely to be public benefit - most of them want to keep a definition out of the Bill and prefer Mactaggart's formula.

A more real danger comes from pressure of time and what former Conservative Prime Minister Harold Macmillan called "events, dear boy, events". Mactaggart recalls that the 1992 Charities Bill was introduced in November and became law the following April, but this Government has a great deal on its legislative plate and, in a crisis, the Charities Bill could be one of the first things thrown off it.

But she is now upbeat and thinks the affair of the dog's breakfast actually strengthened the Bill by drawing attention to an area that needed work. "I'm confident that with all the preparation and scrutiny it has had, we've now got a really robust product," she says.

FACT FILE

The Charities Bill

- Gives 12 statutory definitions of 'charitable purpose', replacing the four 'heads' of charity

- Says all charities must provide 'public benefit'

- Puts all charities on the same footing by removing the presumption that education, religion and relief of poverty provide public benefit

- Gives the Charity Commission the task of consulting and issuing guidance on the definition of public benefit

- Gives the commission the role of deciding whether organisations meet that definition and qualify as charities

- Rationalises the commission's powers and extends them to include the regulation of fundraising

- Sets up a new Charity Appeal Tribunal

- Raises from £1,000 to £5,000 the income level at which charities must register with the commission

- Sets up a new legal form for charities, the Charitable Incorporated Organisation.

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