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1703 Public Administration Committee 6 JUNE 2013 Public Administration Committee 1704
Report (Charity Commission)
Report (Charity Commission)
lacks necessary powers, it should tell us. Generally, however,
the abuse of charitable status to obtain tax relief is
intolerable and should be uncovered by Her Majesty’s
Revenue and Customs and the Charity Commission
working more closely together.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op): Will
the hon. Gentleman give way?
Mr Jenkin: I want first to give way to my fellow
member of the Committee, the hon. Member for Newport
West.
Paul Flynn: The report does nothing to add to the
reputation of this House. It is an atrocious report and it
is a bad reflection on our systems that the Chairman of
the Committee can take up the entire time devoted to its
consideration.
Let me take the hon. Gentleman back to the point
about the situation with independent public schools. It
was hoped that the 2006 Act would change the unfairness
whereby Eton and Harrow get a handout from taxpayers
whereas ordinary schools in poor areas do not. The Act
tried to change that, but a perverse decision taken by
the law stated that the status of a charity depends on
what it was established for, not on what it does. Two
charities—one in Wales that exists to give petticoats to
fallen women and another that exists to give education
to the orphans of the Napoleonic wars—are more
important than the fact that ordinary schools are deprived
of charity status whereas public schools for the rich and
privileged continue to enjoy that status and the related
handouts.
Mr Jenkin: I am grateful to the hon. Gentleman for
his intervention, because he demonstrates the diversity
of view on the question of the charitable status of
independent schools. That shows why that matter should
be decided by this House and Parliament, rather than
simply being passed to the Charity Commission to
determine. It is too controversial and we should not be
delegating legislative functions to an executive body.
Mr Sheerman: I am obviously not a member of the
hon. Gentleman’s Committee, but I am a trustee and
chair of a number of charities. Can he comment at all
on the well-known whistleblower who worked for the
Charity Commission but said that the weakness of the
commission is that it has absolutely no power to investigate
what is known to be widespread fraud in the charitable
world? The commission is ineffective at doing that and
does not have the necessary staff. Even the staff it does
have are not directed to that large-scale fraud, which the
whistleblower who came to see me told me is going on
and must be stopped.
Mr Jenkin: I am mindful of the hon. Gentleman’s
point. We did not major on that during this inquiry, but
it might be something to which we return. We recommend
in our report that the Charity Commission and HMRC
should work much more closely together. In fact, HMRC
has the resource to investigate, penetrate and demand
information about charities and their tax affairs and
donors. In my personal opinion, it is as much a failure of
HMRC as of the Charity Commission, but we recommend
they work together more closely. What we have to be
absolutely clear about is that the Charity Commission
cannot start to conduct extensive investigations into the
tax affairs of charities and their donors; it simply is not
resourced to do so.
Mr Bone: I congratulate my hon. Friend and the
Committee on producing such an excellent report—
Paul Flynn: You haven’t read it.
Mr Bone: There it is, Paul. I’ve read it—okay?
Mr Sheerman: We’ll test you on it.
Mr Bone: Madam Deputy Speaker, the suggestions
being made from a sedentary position that I have not
read the report are outrageous.
Madam Deputy Speaker (Dawn Primarolo): Mr Bone,
I quite agree. Mr Sheerman, Mr Flynn, you have made
your contributions, and shouting across the Chamber is
not helpful.
Mr Sheerman: He spends his life shouting across the
Chamber.
Madam Deputy Speaker: Well, the next time he shouts
across the Chamber when I am in the Chair, I can assure
you I will pick him up, as I do everyone. Mr Bone, you
may continue.
Mr Bone: May I refer to a different aspect of the
report, on charitable status for religious institutions?
Many such institutions feel that there has been creep by
the Charity Commission in defining public benefit or,
worse still, going to the tribunal to define it. From what
the Chair of the Committee is saying, I gather that he
thinks this is something that Parliament should revisit.
Mr Jenkin: That is exactly right. The legal advice we
received on this question is quite clear: in the 1949 case
of Gilmour v. Coats, the House of Lords made it clear
that a cloistered religious order is not charitable, as any
benefit is restricted to its members, who are a private
class and not a sufficient section of the public. It has
never been the case that every religious organisation is
automatically charitable. However, the judgments in
two other cases—Neville Estates v. Madden in 1962 and
Re Banfield in 1968—were that a private religious group
that is not wholly shut off from the world at large may
be charitable.
The 2006 Act was not intended to introduce anything
new, and it may have introduced some instability by
requiring the commission to think up guidance on
public benefit. That is what we feel was the real mistake—the
apparent removal of the presumption and the requirement
to produce guidance. If Parliament wants public benefit
to be defined, it should define public benefit or it should
leave the matter to the courts. Making the Charity
Commission use its intervening judgment is what Lord
Hodgson of Astley Abbotts described as the hospital
pass.
Mr Nuttall: Will my hon. Friend give way?
Paul Flynn: Will the hon. Gentleman give way?