Ministers stand firm on public benefit and payment of trustees

In its response to two reports on charity regulation, the Cabinet Office says there will be no statutory definition of public benefit and no at-will payment of trustees

Parliament
Parliament

The government will not create a definition of public benefit, allow payments to trustees at will or change the law on charity campaigning, the Cabinet Office says in its response to reports from the Public Administration Select Committee and Lord Hodgson.

The Cabinet Office response comes in relation to The Role of the Charity Commission and "Public Benefit": Post-legislative Scrutiny of the Charities Act 2006, published earlier this year by the PASC, and Lord Hodgson’s statutory review of the Charities Act 2006, Trusted and Independent: Giving Charity Back to Charities.

"The government agrees with Lord Hodgson’s recommendation not to pursue a statutory definition of public benefit at this time, although the possibility of change should not be completely ruled out," the response says.

The committee had made recommendations for the removal of the presumption of public benefit in the Charities Act 2006 to be repealed, along with the commission’s statutory public benefit objective.

But the government says in its report that it agrees with Lord Hodgson’s recommendation not to pursue a statutory definition of public benefit.

"However public benefit is defined, there will always be those cases around the margins where interpretations of the law differ, and which will sometimes be tested through the courts," the report says.

There is also no change to the government’s view on payments for trustees since its interim response to Hodgson’s review last year.

Hodgson suggested that charities with incomes of more than £1m should be allowed to pay their trustees without first securing approval from the Charity Commission.

However, the government’s response welcomes the conclusions of the committee, which said that the payment of trustees "would undermine the voluntary principle central to the whole ethos of the charitable sector".

The government’s report says that applications to the commission from charities wishing to pay their trustees are infrequent.

"We therefore consider that, for the time being at least, and until there is stronger evidence that would support an easing of the general presumption against trustee remuneration, we should retain the status quo, but monitor the number of applications the Charity Commission receives and the number it grants or refuses," the government’s report says.

There will also be no change to the law around charity campaigning, despite the government welcoming recommendations made by the committee for the commission to require charities to declare in their annual returns how much of their spending goes on political and communications work.

The government says it will encourage charities to improve the information they provide about their political and campaigning activities. "We will work with the commission to explore the potential for information on political and campaigning activities, and on charities’ income sources, to be captured and disclosed in a proportionate way through existing processes," the report says. "Any future changes would be subject to public consultation."

The report accepts recommendations from the committee and Hodgson that a new charity ombudsman would offer little value to the sector. "We agree with both the committee and Lord Hodgson that charities should take more responsibility for resolving complaints and internal disputes, or risk damage to the sector’s reputation," the report says.

- Read other stories on the government's response to Lord Hodgson and PASC's reports by visiting our Big Issue

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