I beg to move, That the Bill be now read a Second time.

The Bill is part of a renewed drive by the Government to break down the barriers that face the charitable sector. Charities and voluntary organisations play a fundamental role in the fabric of our society, and provide a vital service to individuals and communities. By creating the office of the third sector and introducing the Bill, we have underlined our commitment to the growing importance of charitable endeavour in our society by helping to release charities’ potential for further public good. There are about 190,000 charities on the public register in England and Wales, with a combined annual income of over £39 billion.

The sector has significant social and economic weight, but as society evolves, so our charities must be given the freedom to meet the challenges of the modern world. The Bill will enable them to keep pace with the modern social landscape while ensuring that they are accountable to the public whom they serve. One of the most important ways in which the Government can support and enable the charitable sector to develop is to create a framework within which charitable endeavour can thrive.

We have three clear aims for the Bill. First, we wish to provide a legal and regulatory environment that enables all charities, however they work, to realise their potential. Secondly, we wish to encourage a vibrant and diverse sector, independent of Government, and thirdly, we wish to sustain high levels of public confidence in charities through effective regulation.

Will the right hon. Lady give way?

It is a bit early, but yes. I have not got into my speech yet.

The right hon. Lady is very gracious. I apologise for intervening a little early on. Will she assure the House that nothing in the Bill will remove the presumption that religion is a public benefit?

The hon. Gentleman might like to wait to hear what I say about that, but I am confident that religion certainly has a charitable purpose and that religious organisations will be able to demonstrate effectively that they are of public benefit. That is the key point of the Bill. Both criteria have to be met. Any organisation that is charitable and produces public benefit is allowed considerable tax concessions, which is public money, because otherwise they would be paying that. However, as I say, I am confident that any religion that I have come across would be able to meet both criteria.

The Bill will make improvements—

Will the right hon. Lady also reassure universities and the higher education sector that research and knowledge transfer will remain charitable activities in the public benefit?

I have learned already that there are incredible legal issues here, and I do not want to say anything that will lead me into giving lawyers any more money than they are already entitled to. The hon. Gentleman has wound two questions into his one intervention. One concerns the status of universities, to which I will come later. If, say, they are part of a research programme that a medical charity is undertaking, again they will have to meet the public benefit test, but I am confident that they would do so. As I say, I will come to the particular status of universities later.

The Bill will make improvements in several—

Bracketed with my right hon. Friend’s very popular assertion that she does not want the legal profession to have any more money than it already receives, I am sure that it would be equally popular if she were to incorporate private schools in that. Is she minded to accept an amendment from a group of us that would prevent organisations that charge unduly restrictive fees from being granted charitable status? That is just as worthy an aim in this admirable Bill.

Again, I shall deal with that specifically later in my speech, so I should be extremely grateful if my hon. Friend would hang on until then, when he may wish to intervene again.

The Bill will make improvements—

Will the right hon. Lady give way?

I am anxious to get into the meat of my speech, but I will take this further intervention.

I am extremely grateful to the right hon. Lady, who has certainly been very generous at an early stage of her remarks, but I am trying to follow what I think is the chronological sequence of the Bill, and I think that my question is apposite. Are the order-making powers under proposed new clause 3A to the Charities Act 1993, referring to registration of charities, subject to the negative procedure of the House or to its affirmative counterpart; and whichever it is, may we have a draft of the regulations before the Bill’s passage?

Again, I shall deal with that later in my speech. The hon. Gentleman says that he wants to deal with the Bill in sequence, but I have not yet begun to deal with the Bill—I was still in my preamble.

The Bill will make improvements in several areas of the law and in the regulation of charities. The most important improvements concern the definition of “charity”, the constitution, functions and powers of the Charity Commission as regulator and in its relationship with the Government, the creation of a new corporate legal form for charities, which will be called the charitable incorporated organisation, changes to ensure that effective and proportionate regulation applies right across the charitable sector, including those charities which are not currently required to register with the Charity Commission, and the regulation of people who collect in public for charity. I shall deal with each of those specific areas in more detail.

The Bill is the result of a thorough process, including extensive consultation with charities themselves and significant time spent in the other place. I know that many hon. Members are active trustees, volunteers and, indeed, supporters of charities, and they are well aware of the strong support for the Bill across the breadth of the charitable sector.

The Bill originated in a review by the Prime Minister’s strategy unit, which was published in 2002, of charities and the wider not-for-profit sector. We received more than 1,000 responses to the public consultation on that review, and those responses showed clear and strong support for the great majority of the review’s recommendations, which form the main content of the Bill.

The Bill was published in draft in May 2004, and it received thorough pre-legislative scrutiny by a Joint Committee, which was skilfully chaired by my right hon. Friend the Member for Darlington (Mr. Milburn), who is in his place today. The Government accepted more than three quarters of the Joint Committee’s recommendations, and the Bill emerged the better for it.

The Bill was first introduced in December 2004 in another place, where it was extensively debated, and it fell when Parliament was dissolved in April last year for the general election. It was reintroduced at the first opportunity in this Parliament, and it has had more than 60 hours of debate so far.

It has been well over a decade since any significant changes have been made to charity law, and many of the aspects of the current law are considerably older than that. Charity law has simply not kept pace with changes in our society and in the diverse voluntary sector.

The Bill extends to England and Wales, but not to Scotland or Northern Ireland, where charity law is a devolved matter. Even before devolution, there were three different systems of charity regulation in the UK—one for England and Wales, one for Scotland and one for Northern Ireland. In July 2005, the Scottish Parliament passed an Act including many of the reforms that our Charities Bill will make for England and Wales, and similar proposals are being worked up in Northern Ireland. After all those reforms have been enacted, the three systems will continue to be compatible without being identical.

The Charities Bill contains 78 clauses and 10 schedules, and it is divided into four parts. Part 1 of the Bill contains the provisions defining “a charity”, which are very important. Any organisation which falls within the definition gains access not only to valuable tax exemptions, but to a special status, which enjoys a high degree of popular trust and confidence.

I welcome the Bill, which contains many useful provisions. Will my right hon. Friend comment on one issue concerning definitions? She may be aware that one of the purposes which falls within the definition is the advancement of amateur sport. A number of activities which common sense indicates are sports are often excluded from the definition of being sports by the Charity Commission, including angling, ballooning, billiards, pool, snooker, crossbow shooting, rifle shooting, pistol shooting, flying, gliding, motor sports and parachuting. I declare an interest as a participant in one of those sports—while I am on my feet, I shall declare another interest, because I am married to the chief executive of a national charity.

My hon. Friend, whose main interest is in motor sport, recognises that we are, for the first time, classing amateur sport as a charitable purpose. In doing so, the main aim was to promote healthy recreation, so sport has been defined as, in many ways, involving physical skill and exertion. I am not sure how much motor sport fulfils that criterion. However, the Charity Commission, in consultation with the Department for Culture, Media and Sport, will be willing to consider any representations on what exactly the addition to charitable purposes will mean. As my hon. Friend suggests, and as hon. Members’ earlier interventions made clear, once one puts any new definition into a Bill, there arise all sorts of questions about its interpretation. One of the aspects that Ministers are struggling with is the possibility that putting certain things into the Bill will raise uncertainties in the minds of charitable organisations, and others, as to whether they will be covered. I am anxious not to put money into lawyers’ pockets, so I am being fairly careful in that respect.

The scope of charities has developed over the centuries to reflect changes in what society has at any one time regarded as worthy of inclusion. Some sorts of endeavour, such as the relief of poverty, have always been seen as charitable, while others, such as the promotion of human rights, have been accepted relatively recently. Clause 2 provides a list of the many forms of charitable endeavour or charitable purposes, at the same time preserving the flexibility to recognise new charitable purposes in order to accommodate future changes in society. The Bill does not take away the charitable status of any purpose that is already charitable. No charity will wake up on the day after the Bill becomes law to find that as a result the purpose for which it exists has ceased to qualify as charitable.

An organisation cannot be a charity unless its purposes are exclusively charitable. That means that its purposes must fall wholly within the purposes listed in the Bill. To qualify as a charity, an organisation must not only have exclusively charitable purposes but be for the public benefit. The Bill preserves the existing law on the definition and test of public benefit, with one change. Under the existing law, there is the presumption that charities established for the relief of poverty, the advancement of education or the advancement of religion are for the public benefit. Charities established for all other purposes do not benefit from that presumption. The Bill abolishes that presumption. That will create a level playing field on which all charities will have to show that they are for the public benefit. To do so, an organisation will have to show that it generates identifiable benefits that reach, or are available to, a sufficiently large section of the public. Given the great diversity of charitable endeavour, the nature of those benefits and how they reach the public will vary greatly.

The right hon. Lady will know that the Christian Institute, among other bodies, has expressed concern about the withdrawal of that presumption. It worries, for instance, that missionary activities could be liable to reinterpretation. Can she reassure it, and me, that that will not be the case?

I can give the hon. Gentleman a clear reassurance that that will not be the case. However, I would like to clarify the position on the charitable status of fee-charging charities.

I seek further clarification. When a charity registers, it must establish that it is working its activities in the public good. According to the Bill, it must also do so on a continuing basis. How often would that question be raised by the Charity Commission, and how burdensome might that ongoing requirement be for charities?

That will be for the Charity Commission to determine, but any charity already has to publish annually a report outlining what it is doing. That has to be public and I expect all organisations to take that opportunity to express what they are doing to meet the Bill’s public benefit demands. It will be for the Charity Commission to issue guidance and to pursue the matter that the hon. Gentleman raised.

As I was saying, I would like to clarify the Bill’s position on the charitable status of fee-charging charities.

The Minister mentioned that charities would have to have “identifiable benefits”, so will she explain the identifiable benefits of the advancement of religion?

The issue is based at the moment on case law. I know that religions could mention some significant aspects of what they do that relate to public benefit, though they may differ from religion to religion. It is nevertheless important for them to be clear, if they are securing taxpayers’ money, that they are accountable. That is the whole purpose of public benefit. If organisations are exempted from paying taxes, they need to be able to demonstrate to the public how it will benefit. It is not identifiable in the sense that I can describe precisely what the benefits should be, but it is identifiable in that it must be clear that activities benefit the public in a way that the public can identify and respond to. The Bill is partly about securing public confidence in charitable status.

I really must move on now to issues about fee charging. I am aware of considerable discussion among right hon. and hon. Members and the media about that matter, particularly with regard to the independent schools sector. Until now, owing to a presumption built up through case law, independent schools have automatically been granted charitable status if they requested it. Previous legislation, including the Charities Act 1992, did not deal with the problem, but the Bill before Parliament today will abolish the presumption that independent schools can be charitable simply because they provide educational services. For the first time, they will have to demonstrate public benefit in order to gain charitable status. That same principle will apply to all fee-charging charities in whatever sector they operate.

Many organisations—whether they be a hospice, a local museum, an outreach programme or any other organisation that charges a fee but is charitable—provide vital services and are held in great affection by the communities that they serve, and the Bill will require each to be assessed on its own merits and judged accordingly. Several of my hon. Friends have already suggested that they would prefer an amendment to specify more clearly in the Bill what the public benefits should be. I remain to be convinced of the necessity of that and am anxious about the downsides. By trying to be more specific, we do not want to exclude organisations that should not be excluded. I hope that hon. Members, especially my hon. Friends, understand that we are determined that there will be a test of public benefit, which we expect to be meaningful, but that trying to identify matters too clearly frequently brings disbenefits that nobody anticipated.

The Minister has been clear about some of the organisations that would not be affected by the Bill’s new version of the public benefit rule but will she clarify—for her hon. Friends as well as me—whom she would expect to lose charitable status as a result of the Bill? To be meaningful, the measure must affect somebody when compared with current legislation.

The measure means that every organisation that seeks charitable status will have to be clear about how it believes that it benefits the public, and the Charity Commission will assess that. The Charity Commission is the regulator, which will produce guidance. It is not its aim to ensure that some people lose charitable status. It will listen to what Parliament is saying, and I believe that Parliament is strongly of the view that it wants the public benefit test to be meaningful. I would expect the Charity Commission to reflect that in its guidance.

I welcome my right hon. Friend’s reference to the engagement of Parliament in the process. She is wise to resist too tight a definition but there is a great deal of knowledge in the House, and if the Charity Commission, in reaching its conclusions—as it must as an independent body—listens to Members of Parliament, that is infinitely preferable to a tight hand of legislation or Government. I encourage her to proceed in that way.

My right hon. Friend understands well how Ministers approach such matters. There are frequently so many different legal interpretations, and we do not want charities to become too engaged in legal cases. Another aspect of the Bill makes it easier for matters to be sorted out through tribunals. They should be sorted out on a case-by-case basis and I believe that the Charity Commission will listen carefully to what we say. I trust that it will be guided by what Parliament says.

My right hon. Friend knows that many independent schools have excellent drama, sporting, field study and other facilities and that, increasingly, state schools throughout the country are entering into partnerships and gaining access to those facilities. Does she believe that those independent schools will be more or less likely to share those facilities if they are forced to lose 4.5 per cent. of their income through the removal of charitable status?

My hon. Friend makes a good point. We intend to ensure that we get the best educational opportunities for every child in this country. The independent schools, in partnership with the state, can contribute to that aim. I would expect them to do so. I envisage the Charity Commission considering such direct and indirect benefits.

The Minister gave a most helpful answer to my earlier intervention. I accept the point made by the right hon. Member for Cardiff, South and Penarth (Alun Michael). Will the Minister ensure that the Charity Commission’s attention is drawn to what is said not only on the Floor of the House today but in Committee and during remaining stages? It is important that it knows that Parliament is passing it great power, and is not asking it to nit-pick, ride hobby-horses or have agendas, but to consider, in the broadest way, what can deliver benefit and good to the public, and interpret matters accordingly.

I thank the hon. Gentleman. I hope that I have made it clear to the House that I would encourage the Charity Commission, although I would not want to interfere in its independence, to take note of all our debates on the Floor of the House and in Committee.

Part 2 of the Bill is divided into 11 chapters, each of which deals with some aspect of the regulation of charities. Chapter 1 of part 2 converts the Charity Commission into a corporate body. Currently, its functions are discharged by the five charity commissions. The chapter also contains reforms to the commission, modernising its constitution, governance and powers to build on its current effectiveness. We are giving the commission five new statutory objectives and are requiring it to report annually to Parliament on the extent to which it has met its objectives. I hope that that reassures the hon. Member for South Staffordshire (Sir Patrick Cormack) and others about the commission’s relationship to Parliament.

We are also putting the commission under a duty to have regard to the principles of best regulatory practice, including the principle of proportionality under which a regulator’s action must be proportionate to the risk posed by the problem with which it deals. We included that Joint Committee recommendation after listening carefully to the debate in the other place. In fact, the commission already operates in accordance with that principle, and recent surveys have recorded the high levels of satisfaction among charities that have dealt with it.

The commission is and will remain a non-ministerial department. We believe that its independence from Ministers is of paramount importance for the proper regulation of charities and for public confidence in the regulatory system. The Bill expressly prevents any Minister from controlling or directing the commission in its regulatory work. Those changes are to ensure that we have a Charity Commission that is independent and emboldened but accountable, regulated and effective.

Chapter 2 of part 2 creates a new charity tribunal. At the moment, anyone wanting to challenge a regulatory decision or order made by the commission must take it to the High Court, which is daunting and prohibitively expensive for the vast majority of charities. The new tribunal will provide a simpler, quicker and cheaper route through which to challenge the commission and improve its accountability.

Chapter 3 of part 2 deals with the registration of charities. There are three main changes. First, the Bill raises from £1,000 to £5,000 the income threshold above which a charity must register with the Charity Commission. The Joint Committee on the draft Bill found that there was a consensus for a registration threshold of £5,000. Charities whose income falls below the threshold will be able to register with the commission if they so wish, which will give more freedom to smaller, local charities.

Secondly, the Bill brings the arrangements for excepted charities into line with those for other charities. Excepted charities are those which fall within the regulatory powers of the commission but which are not currently required to register with it. They include some charities within the Church of England and other Christian Churches, and some charities within the armed forces. Requiring such charities to register will not significantly increase the regulatory burden on them but will rightly increase the transparency and accountability of those charities, which have exactly the same entitlement to tax relief as registered charities. To ease the transition from excepted to registered status, we are starting by requiring only those with an income of more than £100,000—the top 10 per cent. or so—to register. As we have said, we expect gradually to bring more of those charities into registration in future.

Thirdly, the Bill introduces new arrangements for the so-called exempt charities, which will include the universities, other places of further and higher education, some registered social landlords and some museums and galleries. Exempt charities are those that are currently outside the Charity Commission’s supervisory and monitoring powers. They enjoy the status and fiscal benefits that other charities have, but there is currently no mechanism for monitoring their compliance with charity law. The Bill changes that.

When a regulator is already in place—for example in the case of registered social landlords who are regulated by the Housing Corporation—that regulator will take on responsibility for monitoring compliance with charity law. When no suitable regulator is already in place, the Charity Commission will take on that responsibility. The proposed new regulators have been identified following extensive discussion with the relevant regulators and charities, and will be prescribed by regulation. The purpose of the changes is to ensure that modern and effective regulation extends right across the charity sector, not just to some parts of it.

Chapter 5 modernises the Charity Commission’s regulatory powers. It includes new powers for the commission to suspend or remove trustees and employees from membership of their charities. Chapters 6 and 7 raise the income threshold above which charities must have their accounts professionally audited, releasing about 3,000 charities from that obligation.

A development that we believe will be particularly useful in the longer term is the creation by chapter 8 of part 2 of a new legal form called the charitable incorporated organisation, or CIO. That could bring significant deregulatory benefits by allowing charities to take an incorporated form without having to submit to regulation under company law as well as charity law. A charity in CIO form will be treated and regulated as a charity, but not as a company. Existing charities will be able to take on CIO form, and new charities will be able to start up in CIO form.

Perhaps three quarters of a million people in England and Wales are trustees of charities, giving their time, commitment and expertise, unpaid, to the service of others. Trusteeship is a demanding yet personally rewarding endeavour. We want to encourage more and a greater diversity of people to be trustees of charities.

Would the Minister react warmly to the tabling of amendments that would allow people with learning disabilities to be trustees in organisations where there are learning-disability issues?

I never like to make commitments on amendments, but I should be very surprised if that were not already possible. I am fairly sure that it is, because I am fairly sure that I know someone with learning difficulties who is involved. I shall examine the position.

Chapter 9 of part 2 contains three provisions that will be helpful to trustees in their stewardship of charities. The first will allow a charity to pay a trustee who is willing and able to provide his or her charity with a professional or trade service that it needs. I emphasise that the Bill will not allow payment of a trustee for carrying out the ordinary duties of trusteeship, nor will it allow charities’ paid employees to be trustees at the same time. It preserves the voluntary principle of trusteeship which is part of the ethos of charity. The second provision will allow trustees to apply to the Charity Commission for relief from personal liability for breach of trust when they have acted honestly and reasonably, but their action has nevertheless caused some loss to their charity. The third will allow trustees to pay for trustee indemnity insurance using their charity’s money.

Those measures are intended to encourage more people to become or continue as trustees by giving them confidence that they will not be personally penalised for an honest mistake. The fear of having to pay out of one’s own pocket to make good an honest mistake can be a real deterrent both to the taking on of a trusteeship and to innovation in the running of a charity.

Chapters 10 and 11 of part 2 will allow smaller charities to alter their own constitutions without needing the Charity Commission’s permission. The rules restricting charities’ abilities to spend their capital endowments will also be relaxed, though the concurrence of the commission will be required before they may override the wishes of a donor who has given a large sum as an endowment on condition that only the income from it can be spent. Some legal and technical obstacles to mergers between charities will also be removed. Decisions whether or not to merge will of course remain for charities themselves: it is not the Government’s role to procure mergers between charities or to put pressure on charities to merge. However, it should be easier for them to merge, if that is their wish.

An important part of the Bill, part 3, is the reforms to the regulation of public charitable collections. The present arrangements do not work as well as they could, because different types of collection are subject to different sets of licensing rules, and because the rules are applied differently from one local authority to another. Through the Charities Act 1992 it was intended to introduce a new scheme for the regulation of fundraising, but the relevant part of the 1992 Act was never introduced because the proposed scheme was thought to be unworkable in practice.

We propose in part 3 of the Bill a new, unified licensing scheme to iron out the inconsistencies. We responded to a recommendation made by the Joint Committee on the draft Bill by giving the Charity Commission the role of determining the eligibility of organisations to carry out public collections. Charities and other bodies wanting to carry out public collections will be able to apply to the Charity Commission for a public collections certificate lasting for up to five years. Public collections in the street will continue to require, as well as that certificate, a permit from the local authority to authorise the time and place of the collection. For public collections from house to house, which includes from pub to pub, a public collections certificate will be needed and the collection must be notified to the local authority. The Bill brings face-to-face fundraising, sometimes called “chugging”, within the statutory licensing scheme.

Elsewhere in part 3 there is a reserve power for the Government to introduce a statutory scheme for the regulation of charity fundraising generally. We have said that that power will be exercised only if self-regulation fails. I am glad to say that self-regulation, led by the recently established Fundraising Standards Board, is getting off the ground very well. The Government hope and expect that self-regulation will be effective in the longer term, although the power in the Bill will be available should self-regulation fail.

My right hon. Friend describes some welcome changes in regulation that involve some significant new powers and responsibilities for the Charity Commission. Can she assure the House that the commission will have the capacity and the funding to deliver on those powers?

My hon. Friend raises an important point. We are working with the Charity Commission so that we have a better estimate of what the reforms will cost. We will have to consider the situation once the figures are clearer than they are at present.

Other provisions of part 3 include provisions to put beyond doubt the Government’s power to fund charities and other voluntary organisations. That responds to the concern of the Home Affairs Committee about the lack of a proper statutory power for the Home Secretary’s funding of voluntary organisations. The Bill gives the National Assembly for Wales the same funding power as it gives to the UK Government.

I am surprised that the fiscal regime for charities is not addressed in the Bill and I hope that we will be able to take account of that in consideration of the Bill. In particular, the question whether VAT can be recovered is crucial in determining whether charities in the social and health care area are effective in spending their money. Is that an issue that the redefinition of charities will help to address? Discussions with the Treasury just seem to lead to even greater opacity.

I hear my hon. Friend, but the problem is that his “opaque area” carries a bill of about £500 million. In any financial matter, the Government must take an overall view about their priorities. It is always for the Treasury to take that view first, through the Budget and its proposals in the Finance Bill, rather than it being done in a Bill such as the one before us. Matters will move and change over the years, and the Government take the overall management of the economy very seriously. We have done very well at it, and I do not want to be the Minister who undermines it through something in this Bill, given that the economy is a matter for my right hon. Friend the Chancellor of the Exchequer.

The hon. Member for Stroud (Mr. Drew) raised a very important question. In Shrewsbury, the League of Friends of the Royal Shrewsbury hospital raises hundreds of thousands of pounds every year to buy vital hospital equipment, which the Government do not therefore need to purchase. It is important that the Minister takes on board its view that it would benefit greatly from not having to pay VAT on that vital equipment.

That is a fair point, and many such points can be made. However, our investment in the health service means that that league and others can continue to purchase equipment and services that are often not central to the national health service. The leagues do a very good job, but we have put additional money into the health service—considerably more than £500 million. Priorities must be set and judgments made. I could make a comment, but I am not going to do so. [Interruption.] I am sure that the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) knows that it might be about the investment in the health service, and who supported it and who did not.

The hon. Lady is being charitable.

I am.

Part 4 contains the final provisions, including one that will require the Government to commission a general review of the operation of the Act within five years of Royal Assent and to report it to Parliament. That is an important provision. We will then be able to consider some questions about which hon. Members, for perfectly sound reasons, have concerns. The Government are introducing the Bill, but the regulator will be at arm’s length—at least—from the Government. Parliament will want to review how measures such as the public benefit test are interpreted. We will have the opportunity to do so, because the Bill provides for a review within five years. The Bill will allow us to judge the legislation’s effect on various matters, including public benefit, as I said, and public confidence in charities.

Another provision in part 4 will pave the way for the consolidation of charities’ statute law to make it easier for charities and their advisers to read and understand the law. I am sure that many of us welcome that.

The Bill will support the work of thousands of people and organisations, working throughout the country to make a real impact on their communities, by improving the ways in which charities are run and regulated. The Bill’s overall effect will be deregulatory. It will liberate charities and enable them to provide an even better service, while ensuring that they are fairly and rigorously accountable to the public.

The Bill enjoys high support from people in the voluntary and community sector, many of whom have been involved in drafting it. It gives me great pleasure to present it, and I commend it to the House.

I welcome the Chancellor of the Duchy of Lancaster and her Parliamentary Secretary to their new responsibilities. It must be a great relief to the right hon. Lady to be relieved from the vow of silence that binds the Government Chief Whip, and I am sure that it will do us all good to benefit from the additional intellectual weight that the hon. Member for Doncaster, North (Mr. Miliband) brings to the new office of the third sector.

Last week, I talked briefly to some youngsters in my constituency about the Bill. One aspect of it interested them. It was not the public benefit test or the establishment of the charity tribunal. It was not even the transformation, after 400 years, of the charity commissioners into a body corporate. The thing that interested them was the section on fundraising and whether we will retain the ban—as they see it—on volunteers shaking their tins during street collections. Those youngsters, like youngsters nationally, are the best—they keep up a tradition of fundraising for charity at the numerous carnivals in my constituency, which date back to the first documented carnival in Britain that took place in Ryde in 1888. However, as collectors compete with the amplified music on many carnival floats and with bands such as the Medina marching band, the Wight Diamonds or the Vectis corps of drums, and 40,000 excited spectators, it is difficult for them to draw attention to themselves if they are banned from even rattling their collecting tins. If local councils have the power to impose such a ban—many people think they do—they should use it sparingly, if at all.

I would not be forgiven if I did not pursue that point in Committee because little things, as well as strategic issues, matter in legislation. If we get the little things wrong, as the Licensing Act 2003 is demonstrating, we disrupt people’s lives and destroy the local voluntary effort that is at the heart of much charity work, whether it is fundraising for large charities such as the National Society for the Prevention of Cruelty to Children, with a national turnover of nearly £90 million a year, or for small charities such as the Isle of Wight Historic Lifeboat Trust, with an annual turnover of between £5,000 and £10,000.

As the hon. Gentleman canters through his proposals and comments on the Bill, will he tell me whether he agrees with the right hon. Member for Witney (Mr. Cameron), who wants to set the voluntary sector free, or with the 19th-century philanthropic view of the voluntary sector espoused by the chief executive of the Association of Chief Executives of Voluntary Organisations, or with the view expressed by the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith)?

I shall return to the issue of the 19th-century philanthropic view of charities, but of course I agree with my right hon. Friend the Leader of the Opposition.

Although it is important that charities are effectively regulated to protect the charity brand and to ensure that donations are properly used in pursuance of a charity’s objectives, we should not, by over-regulation, drive out individuals who have an appetite to help their fellow man but do not desire to become bogged down in bureaucracy.

The hon. Gentleman unsurprisingly pledges loyalty to the views of his party leader. He referred to the NSPCC in warm terms. Does he accept and endorse the views of a previous Conservative leader, the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), who urged the NSPCC to stop shouting and start working? Is that the hon. Gentleman’s view of the NSPCC?

I congratulate the hon. Gentleman on getting to point 2 on the parliamentary Labour party sheet. My belief is that we should assist charities to do their jobs better. Many of them—in fact, virtually all of them—want to do that.

At a time when all political parties are enthusing about the role of the third sector in the supply of public services, it is as well to remember that charities and voluntary organisations were the first providers of public services. That is because they were set up by a diverse, and sometimes eccentric, range of individuals and groups to do the good that those individuals and groups wanted to do. Some of that will fit into a national or local strategy, but much of it will not. Those benevolent institutions have continued to serve their public right into the 21st century, while the state has learned from them and taken on some of their responsibilities. Some of that state involvement was to ensure equity of access to essential services; some was rooted in the belief, sadly reflected in the words of a Government Back Bencher, that

“philanthropism…applied in the 19th century”

and that

“private charity is no substitute for organised justice.”—[Official Report, 15 March 2006; Vol. 443, c. 1541.]

That sentiment is now thankfully rare and the value of the voluntary sector as a deliverer of services, an innovator and a social entrepreneur is recognised and celebrated across the political spectrum.

Indeed, the Government’s confidence in community organisations as deliverers of change, in relation to foundation hospitals and trust schools, has sometimes found more support on the Conservative Benches than on the Government Benches. None the less, I welcome the Prime Minister’s announcement last week that there is no longer an ideological barrier to involving the private and voluntary sectors in the delivery of public services. Perhaps, as Steve Bubb, the chief executive of the Association of Chief Executives of Voluntary Organisations, told the Financial Times on Friday,

“things are finally beginning to move”

after repeated pledges since 2000, but limited action. Like him, we will believe it when we see it. The Financial Times said:

“Tony Blair announced a review of the procurement and supply of community equipment worth £200 million a year. This included everything from wheelchairs to the provision of aids needed to keep people out of care homes and to get them out of, or prevent them from entering, hospital.

“Big organisations including the Royal National Institute for the Deaf and Royal National Institute for the Blind and the Red Cross will be involved in the review and will be encouraged to bid for the revamped service that will result.”

I am underwhelmed. Out of an NHS budget of £75 billion, the Prime Minister is able to find £200 million-worth of work for the charity sector. I have news for him: in my constituency, the Red Cross already has that sort of contract. He will have to do better than that to turn his good intentions into reality.

I was present at the conference at which the Prime Minister gave his speech on Thursday, as was the Parliamentary Secretary, my hon. Friend the Member for Doncaster, North (Edward Miliband). The Prime Minister’s announcements, of which that was one example—we are talking about something that is in addition to the valuable work that the voluntary sector already does in the health service—were widely welcomed not just by people from the third sector and the voluntary sector, but by everyone at that conference, including partners in the private sector and the local government sector. It was a good conference with a positive outcome that will take us forward in a way that the hon. Gentleman’s Government never managed to do in the past.

Of course, we all welcome the sentiment. The question is how long it will take the Prime Minister to implement sentiments that he expressed in 2000.

It is right for the Government to see the third sector as an alternative provider of public services, but they must realise three things. If a charity is commissioned to deliver a service, it must be able to decide how. Voluntary organisations work so well because, as the Chancellor of the Duchy of Lancaster said, their independence leaves them free to innovate. If Governments—national or local, of whatever political colour—prescribe how the service should be provided, the hard-won expertise of those charities will be wasted and the contract will not be delivered as well as could have been the case. If one sets up a national or regional contract—perhaps that is what the Prime Minister intends for home-care appliances—one loses the local autonomy and local commitment, and probably the local fundraising, which add love and care to contract delivery.

If we demand that voluntary organisations meet the Government’s objectives too closely, we may find, as the National Council for Voluntary Organisations suggested in its discussion paper in 2001, that each

“may be perceived as little more than an agent of the state.”

It is essential that charities are not too restricted so that the public continue to trust them. Furthermore, we have known for years that too many Government contracts with charities and voluntary organisations last only a single year. Funding often arrives late from Departments. If a contract is too short, long-term planning is impossible and organisations cannot take the risk of investing for the future. Indeed, they sometimes have to divert other income to keep the contract afloat. Staff become uncertain about the future and thus look for new jobs, and delivery declines and the vulnerable suffer.

The hon. Gentleman is being dismissive of the important step that the Prime Minister announced. I speak as someone who saw one relative die while waiting for a wheelchair to be provided by a private company on contract, while another waited six months. In the meantime, it was the voluntary sector that provided. The view of the Prime Minister and the Government that such things should be provided properly and well through a good contract with the voluntary sector is the right step forward.

The hon. Lady is absolutely right. I have no dispute with that at all.

The hon. Gentleman should read the Prime Minister’s speech of last Thursday in which he identified the problem of short-term funding. We are addressing that through the way in which local authorities and others are funded, and it should also be addressed through the way in which the voluntary sector is funded. Is the hon. Gentleman aware that the sector is a partner in the delivery of services? The nightmare scenario that he described will not happen in a proper partnership in which the views of different sides are respected. If the partnership cannot agree how the services should be delivered, there simply will not be a partnership, but we will not see the nightmare about which he talks.

I am not sure that I was talking about any kind of nightmare at all. I was saying that there is a great opportunity for the voluntary and charity sectors.

The problem is that seven out of 13 Departments still do not even keep records of whether funding is agreed before the beginning of the financial year, or of whether their contracts run for more than one year, despite the advice of the Public Accounts Committee. Of those Departments that kept records, the Northern Ireland Office was best—I congratulate it on that—but the Home Office, which was the sponsoring Department for the voluntary sector, was worst.

The Bill is important for the charity sector and the people and purposes that that sector serves. It has already been thoroughly scrutinised. It was one of the first Bills to be subject to pre-legislative scrutiny and it has twice been rigorously examined in another place. However, several provisions remain that will need to be debated and, perhaps, amended in Committee if the Bill is to allow the sector to meet its potential.

The most contentious matter is clearly the public benefit test. Since the 17th century—and in codified form since 1891—there has been a requirement to demonstrate public benefit for most charitable purposes. However, as the Minister said, there has been a presumption of public benefit for the relief of poverty, the advancement of religion and the advancement of education. The Bill will abolish that presumption, so any organisation with a charitable purpose will have to demonstrate a public benefit. The Bill provides for a tortuous and near-incomprehensible formula. Ministers have reassured Parliament that although that will mean that our case law will be allowed to develop, the public benefit test will remain unchanged.

Three groups seem to want to the public benefit test to become more onerous. The first is represented by the Charity Commission, the NCVO and, rather surprisingly, the British Red Cross. The second is a group of lawyers and others who think that although the law on charities has never been the same in England as in Scotland, there should be a post-devolution situation in which Scotland drives England. I was grateful to the Minister for pointing out the objective that the three legal systems should be compatible, but not identical. The third group is the few Government Back Benchers who are chaffing at their failure to maintain the iron grip of mediocrity on Britain’s state schools, with the support, for some reason, of the illiberal democrats to my left. Their motive is essentially to strike down independent schools, which have shown that pupils can get a better education than they could have done from the state. They ignore the damage done to voluntary hospitals and to charitable retirement homes. They do not seem to have thought of the effect on universities, all of which have always charged fees.

I thank the hon. Gentleman for releasing his iron grip on what is a mediocre speech. Can he say whether Her Majesty’s Opposition are likely to support a wholly admirable and worthwhile amendment that is due to be tabled and that would prevent organisations that charge unduly excessive fees from being granted charitable status?

In my speech, which the hon. Gentleman kindly described as mediocre, I was about to say that we will support the Government in voting down proposals for a more onerous public benefit test. I prefer—

I take the hon. Gentleman back to a comment he made a few moments ago. I paused before intervening because I wanted to think about what he said. Did he really mean to say that most state education is mediocre, or did I mishear him?

I can assure the hon. Gentleman that he did not hear those words.

I prefer to look at the presumption of public benefit from another direction. Its abolition will create extra work for the Charity Commission and impose a greater bureaucratic burden on charities. If they have to divert resources toward demonstrating public benefit, that will reduce the amount of good that they are able to do.

My hon. Friend mentioned that private schools will be affected. He will know that one of the best private schools in the country—Shrewsbury—is in my constituency. It does a lot for charity and is very good for the community in Shrewsbury. These plans will affect it, and I am worried about the impact on it of the extra bureaucracy involved in meeting these requirements.

I am concerned about the impact on schools such as Shrewsbury, but I must say that I am far more concerned about the impact on small and much less expensive independent schools that benefit from charitable status and fulfil a public benefit by providing education.

I find it inconceivable that a charity whose objective is the relief of poverty would not, prima facie, be providing a public benefit. Can any Member suggest that a trust for the relief of poverty would not be providing such a benefit? [Interruption.] The Minister for the Cabinet Office says “No”, but money spent on proving that what is provided is a public benefit, or on adjudicating on that question, is surely money wasted.

Secondly, removing that presumption from organisations for the advancement of religion is absurd and opens up a huge debate about whether religious activities have a public benefit. I am talking not about the activities that flow from religion, as most of them are covered by other charitable purposes, but about directly religious activities such as prayer and moral leadership.

Am I right in thinking that the hon. Gentleman is therefore retreating even from the position of his noble Friends in another place? They said that “all charities” should

“have to meet a public benefit test, no matter what their purposes are”.—[Official Report, House of Lords, 28 June 2005; Vol. 673, c. 154.]

That is the view of the Conservative party in the House of Lords, which is hardly the most progressive of organisations.

I am asking Ministers, either now or in Committee, to justify requiring organisations for the relief of poverty to spend time and money demonstrating that they provide a public benefit.

rose—

rose—

I will give way to the right hon. Lady.

I think that the hon. Gentleman has misunderstood the Bill. He is absolutely right in saying that a presumption has been removed, but there has always been the view that public benefit ought to be able to be demonstrated. Every organisation is now expected, as it registers, to publish information annually, so that the public know what it is doing, what its objectives are and how it is fulfilling them, and how it is raising money. Most organisations also want to tell the public what they are spending that money on, and that they are not spending it mainly on administration. I do not believe that individual organisations will face any additional costs if they are already seeking to inform the public properly. One of the purposes of the Bill is to maintain public confidence in the charitable sector, and the only way to do that—

Order. The right hon. Lady has made her point.

I am grateful to the right hon. Lady for having attempted to explain a difficult point. I would like to know the justification for organisations for the relief of poverty spending money on demonstrating that what they do is not only charitable—that is, it falls within the definition of charitable purposes—but for public benefit.

Does the hon. Gentleman accept that even if the presumption remains, such organisations ought to show how they are producing value for the public benefit? Will he turn his eyes to the fourth of the categories of charitable purpose in the Bill, which is

“the advancement of health or the saving of lives”?

Is it not sensible to establish a level playing field whereby all organisations are subject to the same light regime—not a heavy bureaucratic one—and the same requirements?

I do not think that it is possible to come up with an example of an organisation for the relief of poverty that is not conferring a public benefit. I shall talk about the fourth category of charitable purpose, but first I want to finish my point on religion.

Can any hon. Member say what it is in religious activity that confers an identifiable public benefit—the words used by the Minister for the Cabinet Office? I am talking not about the relief of poverty, which is ancillary to much religious activity, but about religious activities such as prayer and moral leadership. How is an organisation to go about demonstrating the public benefit of prayer, which is work for the advancement of religion? How does one demonstrate objectively that prayer offers a public benefit? It may in fact be extremely difficult to prove that the work of an organisation for the advancement of religion is for public benefit, and our fear is that the way will be opened to interminable disputes, which will be no more than a job creation scheme for lawyers and the Charity Commission.

Finally, who can argue that education is not for public benefit?

In my constituency, there are many groups of different faiths, and it would be hard for me to find a single one that did not provide some demonstrable public good other than moral leadership and prayer, to which the hon. Gentleman referred. If I would find that hard in my multicultural, multi-faith constituency, I suspect that that would be true in other parts of the country.

That is precisely the point that I was trying—clearly unsuccessfully—to make. The good, other than prayer and moral leadership, is covered by other charitable purposes. The Bill requires a religious organisation, if it is claiming charitable status only under clause 2(2)(c), to demonstrate that the religious activity itself—the prayer and moral leadership—gives a public benefit. I am at a loss to see how one demonstrates the public benefit of prayer.

It seems to me to be fairly demonstrable that if a large number of people take comfort from prayer—they can be asked whether it comforts them—that is a public benefit. However, my question is on the relief of poverty. The hon. Gentleman said that he could not imagine an organisation for the relief of poverty being challenged on whether it is in the public benefit, but I remember that when I worked for Oxfam in the 1990s, large numbers of Conservative Members fairly frequently challenged Oxfam and other voluntary organisations on whether what they were doing was in the public benefit. Does the hon. Gentleman wish to return to that situation?

The hon. Gentleman fails to recall what was happening at that time. Challenges were put to some charities that they were campaigning politically, not that they were failing to confer a public benefit. The challenge was that they were also unlawfully campaigning using charity money. Some people have changed their views on that.

Who can argue that education is not for public benefit? The principal argument for education being provided at the taxpayers’ expense is that it is in everyone’s interest that we have a better educated nation. The Chancellor of the Exchequer argues that we should extend free education across the developing world, presumably for the same reason. How can it be argued that education that people pay for—those who can afford to do so—is of less benefit than other benefits? In all of these instances the Bill moves the onus. No longer will the Charity Commission have to show that an existing charity is not for public benefit. In future, each charity will have to show that it is for public benefit, making some charities that have lasted for hundreds of years guilty until proven innocent. Just in case anyone advances the argument that an individual charity may not be as beneficial as it should be, I remind the House that the removal of the presumption is merely that.

I am grateful to the hon. Gentleman for giving way during his extraordinary speech. Does he agree with the principle that all institutions that benefit from the taxpayer through charitable status should have to demonstrate public benefit? That is the principle that is at the heart of the Bill. I thought that that principle commanded consensus in the House.

There are two answers to that. First, since 1891 that has not been the case. That was codified at that time. Secondly, I think that it was Gladstone who thought that tax relief was public expenditure. I do not share that view. Tax relief is people keeping their own money, not the state spending money.

I do not want to get into an argument with the hon. Gentleman about tax versus public expenditure and the distinction. There is no question that a more beneficial tax regime that is available for those organisations that have charitable status is beneficial, and it represents a loss to the Exchequer. I ask the hon. Gentleman a simple question, as he speaks for the official Opposition on these matters. Does he agree with the principle that all institutions that benefit in this way should have to demonstrate public benefit? We on the Government Benches do and, I think, so do the Liberal Democrats.

We must balance the benefit that comes from demonstrating that against the loss to charities and the cost to the Charity Commission of so doing. I believe that there will be additional bureaucracy and uncertainty loaded on to charities as a result of what is proposed.

I, too, will ask the hon. Gentleman a simple question. He knows that public benefit is at the heart of the Bill. Is it his intention to lead his troops through the no Lobby this evening?

That question is somewhat premature. I am sure that the right hon. Gentleman will find out before the end of my speech. I know that he was a member of the Joint Committee. I shall answer his question later.

There are some who have advanced the argument that an individual charity may not be as beneficial as it should be. I remind them that the removal of the presumption is only a removal of the presumption. Even where it remains, the commissioners can now, and will be able to do so in future, intervene—as they did in the case of the Finsbury Park mosque, or refuse registration as they did in the case of the Scientologists—where an applicant looks likely to go off the rails. We are not conferring on every charity for ever, even in the three categories that I have mentioned, the presumption of public benefit. It is more than the presumption of public benefit.

The lack of a definition of religion is causing some concern. The definition is important to ensure that those organisations that are traditionally viewed as religious are able to maintain their charitable status while preventing other organisations that are merely philosophical from meeting that definition. This part of the Bill needs further work to secure a satisfactory definition.

There is great concern about the commissioners’ proposal to

“interpret the public benefit requirement in the light of…modern conditions”,

as it would constitute a major attack on religion if it were judged only in modern terms. It is possible to initiate complaints to the commission but, given the time-consuming inquiries that would ensue, that would significantly disrupt and undermine a charity’s activities.

One of the biggest problems facing the sector is over-regulation. Far from reducing the regulatory burden on charities, as the Minister for the Cabinet Office claimed, the Bill increases it, and we have already heard evidence of over-zealous interpretation of the charity commissioners’ role. I received a letter from Girlguiding UK last week, which said:

“Recent emphasis in Charity Commission publications on the responsibilities of charity trustees and the prospective penalties for non-compliance is unhelpful to a largely activity-based organisation… Insistence on highlighting charity trusteeship is discouraging adult volunteers.”

I welcome the Minister’s assurance that the Bill recognises and reduces trustees’ fears, and we will examine that assertion with interest in Committee. We should all focus on the need to reduce bureaucratic demands on charitable organisations if we wish to avoid driving the doers out. Some new regulatory measures should be removed from the Bill, including the £100,000 asset limit on registration, but the £5,000 threshold should be increased. I am concerned that double regulation will be imposed on charities that have hitherto been exempt, such as universities, and I am surprised that they are prepared to be regulated not by the independent Charity Commission, but by the Higher Education Funding Council—a creature of the Education Secretary.

The Bill does not say anything about making the commission’s annual public meetings accessible to as many representatives of small charities as possible, but it is important to do so if such charities are to continue to play a vital role in the sector. We welcome the creation of the charity tribunal, which provides a resolution procedure for disputes without resorting to High Court, and thus reduces costs, but greater transparency is required. The Bill does not allow for the award of compensation to charities by the tribunal, the commission or, in a case of maladministration, the ombudsman, and it does not include a provision to assist charities and trustees that wish to refer the commission to the tribunal. Charities must be able to challenge the commission’s decisions before the tribunal without hazarding charitable funds, so the proposal of a suitors’ fund for that purpose is attractive, and the commission is well-placed to resource such a fund.

Above all, charities must not be diverted from meeting their objectives, and in times of difficulty those objectives must be protected. When the tribunal makes decisions it can award costs, but there is no protection to ensure the survival of a charity that could become bankrupt in attempting to meet such costs, so we propose that the tribunal be required to take charities’ long-term survival into account when awarding costs. We propose, too, that the commission—not the charity—meet the costs of an appointment of the interim manager—previously known as the receiver.

Finally, the Bill can take further steps to make charities more accountable, and representatives of trustees such as local authorities should be required to act in a charity’s best interests. We welcome the fact that the commission has been established as a non-ministerial Government Department, but it should be accountable to Parliament through a Select Committee. Appointments to the commission should be subject to Select Committee approval, to ensure that the commission is openly accountable to Parliament and hence to the public. The Bill gives the commission three jobs—to provide advice, to regulate, and to police—but it will sometimes be hard for charities to distinguish between those roles. The commission should be required to make clear what is advice and what is policing so that charities neither inadvertently break the law nor are unduly circumscribed in their activities because there is a lack of clarity from the commission.

In conclusion, we support the Bill’s overall aims and we wish to see it make reasonable progress, especially after 110 days’ delay between First and Second Reading. We will work with the Government to turn the Bill into the best framework possible within which charities can provide the best services possible to the public. Most charities were around long before we were, and will be around long after. We have a duty to hand them over in good shape, and the Bill must put no obstacles in the way.

It is an unusual event, at least nowadays, that a Government Bill receives an almost universal welcome, but that is what this Bill by and large has received from charities, from organisations representing charities, from commentators, from the media, even from many lawyers, with the possible exception of the hon. Member for Isle of Wight (Mr. Turner). Given the consensus around the Bill, I was beginning to wonder whether there was something wrong with it. But having heard the hon. Gentleman’s pretty extraordinary speech, I am beginning to believe that most things about it are right.

As my right hon. Friend the Minister for the Cabinet Office was kind enough to say earlier, I was privileged enough to be able to chair the pre-legislative scrutiny Committee dealing with the draft Bill some two years ago, and I should like to take this opportunity to pay tribute to the officials and advisers who served us admirably on the Joint Committee, and to those colleagues on both sides of both Houses, who, without exception, were a joy to serve with and to chair.

I like to think that the report that we produced, in keeping with the consensus around the Bill, was also pretty consensual, in tone and outcome. There is only one small caveat, which is that I cannot be held personally responsible for all the conclusions because, sadly, I had to leave the Committee before it finalised its conclusions in order to rejoin the Cabinet, and for the rather less consensual purpose of co-ordinating the Labour party’s general election campaign. I like to think that the Joint Committee was a successful endeavour, and I like to think that the general election campaign was reasonably successful too.

I remain a real convert to the pre-legislative process. I very much endorse what the hon. Gentleman and my right hon. Friend said. That process is far less partisan and far more open to analysis and debate, and, as a consequence, makes, where it is possible, for far better law. Indeed, I should like to see it go much further in this House and in the other place.

The fact that the Government also took on board so many of the Committee’s deliberations is testimony to Ministers’ willingness to listen in order to improve the Bill’s content. I welcome in particular the decisions to guarantee the independence of the Charity Commission; to improve the proposed licensing arrangements for public collections, to which my right hon. Friend referred; to consolidate, importantly, charities’ legislation, once the Bill has successfully completed its passage through the House; and finally, and very importantly, my right hon. Friend’s preparedness to review the performance of the Bill in the real world five years following its completion. Each of those changes has undoubtedly improved the Bill, as will have the detailed scrutiny that it has already received from the very many charity experts in another place.

There are three principal reasons why the Bill is needed. The first is the necessity to modernise what is at best outdated and at worst pretty chaotic charity law. 1601 was no doubt a very fine year. It was for Her Majesty Queen Elizabeth I. She managed to thwart a rebellion led by the Earl of Essex. It was a less successful year for the Earl of Essex because he was beheaded. I do not say in any way, shape or form to my hon. Friends that I am looking for such a measure to deal with latter day rebels, although I bet that on occasion my right hon. Friend when she was Chief Whip would have welcomed that for certain of my hon. Friends.

Name them.

I shall resist the temptation to name them. However, 1601 was also the year when charities legislation was first codified. Perhaps understandably given the huge amount of case law covering the work, the purposes and so on of charitable organisations, that legislation requires modernisation, and it is not surprising that the National Council for Voluntary Organisations has called the current law, “complex and inconsistent”.

Secondly, today’s charitable sector would be completely unrecognisable to those who set out the first framework for charitable law, and it is characterised by its huge diversity and enormous size. As my right hon. Friend the Minister has said, there are about 200,000 charities, which have an income of almost £40 billion a year. Charities, from the smallest to the largest, play a hugely important role in our country and, indeed, in each of our constituencies. Taken together, charities and the wider voluntary sector employ more people than the national health service, which makes them as big, if not bigger, than the Chinese red army or the Indian Railways, although they are hopefully more enlightened and efficient.

Although the mainstay of the sector remains small, volunteer-led, locally run charitable organisations, we have seen some formidable and fundamental changes in the nature of what charities do and in the way in which they look in recent years. Organisations such as Turning Point, the British Red Cross and the Royal National Institute for Deaf People belie the image of an amateur, poorly run, volunteer-led organisation. Such organisations are extremely successful, extremely large and extremely professional, and they make a real difference—for example, housing associations are the main providers of affordable homes in our country nowadays.

Organisations such as Christian Aid, Oxfam, Save the Children and the Red Cross play an important role in development. Most instructively, voluntary hospices have not only become the main providers of care for the terminally ill, but given birth to a new branch of modern medicine in this country and throughout the world.

On the roles and functions of organisations, the number of social enterprise organisations is clearly growing. Will redefining the law on whether charities are fit for purpose help social enterprises to expand? Social enterprises are clearly not set up with charitable purposes, but they are not private businesses and are obviously not part of the state.

My hon. Friend has made an extremely good point. The voluntary sector is now characterised by huge diversity not only in terms of size, but in terms of form—there are social enterprises, community organisations, residents’ organisations and charities.

In a moment, I shall touch on the point that the Government have tried in this Bill and other legislation to make it easier for voluntary organisations to choose from a variety of different legal forms. My right hon. Friend the Minister has referred to the charitable incorporated organisation, which we touched on in Joint Committee, and there are other forms, too. I welcome the blossoming in voluntary and community organisations, which are making a difference in how services are delivered not only locally, but nationally, and I welcome the diversity that we are beginning to see within the voluntary sector.

The third reason why the Bill is needed is that the right framework of law and regulation can help realise the potential, which the hon. Member for Isle of Wight has touched on, that undoubtedly exists for the sector to grow even further, which would help the Government to deal with some of the formidable social challenges faced by a modern society such as ours. Because charitable organisations are often grounded in local communities, they are well placed to grow social capital, which can deal with big social issues such as fighting crime, improving health or regenerating communities. Some of the most inspiring people whom I have met in my constituency are members of community organisations who are leading the local effort to tackle such types of disadvantage.

The truth is that we now live in an era in which, by and large, citizens are far more informed and inquiring; they know more and want to be engaged more. The old proposition that our job here is to do things to people no longer applies—doing things with people holds the key to progress. In that context, charitable and voluntary organisations have an enormous role to play. A vibrant voluntary and, in particular, charitable sector forged from the combined efforts of millions of unpaid volunteers should surely be the bedrock of a modern civil society based, as it is, on active citizenship.

In other words, charities can do more than do good—they have at least the potential to change the way in which our country is governed. That is long overdue. For decades, policymakers—this is not a partisan point, as it applies to all parties of Government—have practised a top-down approach in dealing with the big social issues of the day. I see that graphically illustrated in my own part of the world, the north-east, where the inner-city regeneration schemes of the 1970s and the 1980s were characterised by one thing—the pouring in of millions, in some cases hundreds of millions, of pounds of public investment, with, at its heart, the fallacy that was the failure to consult and, more importantly, to involve the residents who were the supposed beneficiaries of such resources. It is hardly surprising that such schemes came and went, came and went again, and failed. Some of the new programmes that I am proud to say that this Government have pioneered, such as the new deal for communities, have begun to change that top-down approach and to substitute a bottom-up approach whereby local residents are not only consulted on, but involved in, how services are provided and how their communities are run.

However, we need to go beyond individual initiatives, however good they might be, to a wider approach encompassing what the Government do, and how the state behaves, to empower individual citizens and local communities to take greater control and thereby exercise far greater responsibility for themselves. That is where charities not only have a key role but stand before an open goal. Over recent years, the reforms that the Government have made in our public services to introduce common standards and systems of inspection allow our country to make progress towards a system that is commonplace in other European countries, where the origin of the provider becomes far less important than the quality of services that they provide.

In local government nowadays, more and more services are run by the private sector. In social services, the majority of elderly care services have been contracted out to the private sector. There are issues about standards and so on, but by and large it is fair to say that standards are better than they were 10 or 20 years ago. In education, we have more partnerships between the public and private sectors. I would argue that those partnerships have helped to drive up standards, particularly in the most disadvantaged communities. As for health, when I was Health Secretary I signed a concordat with the private sector. That was not universally popular with Labour Members, and was indeed subject to a great deal of criticism from Opposition Members. We brought in new overseas providers, again from the private sector. The end result has been to improve standards and outcomes and to shorten waiting times to the benefit of NHS patients.

The next step is to move beyond an automatic assumption that the only alternative to the public sector is the private sector. Over the next decade, the charitable and voluntary sector should become as integral to public service delivery in Britain as either the public or the private sector. It can help to open up public services so that they become far more responsive and offer those who use them far greater choice.

My right hon. Friend eulogises the benefits that he asserts have resulted from partnerships between the private and public sector in the world of education. Does he not accept that at least some of those benefits have been somewhat tokenistic and that most partnerships have come about as a result of sharing sports facilities, musical access and so forth? Very few indeed have been rooted in the sharing of teaching and learning skills of a more conventional nature.

With friends like that!

Thank you to my supposed hon. Friend, or whatever he is. I will come to precisely that point in a few moments. When the Joint Committee was taking evidence, we heard about some good examples of meaningful partnership between the private and state sector, particularly in education. To be honest, we also heard about some pretty poor examples, where the lack of partnership between the sectors was more evident. In large part, the test of public benefit, which some have decried, can help to address the deficiencies and to realise the potential of partnerships. I will return to that theme in a moment or two.

It seems to me that, if we can get the framework right, the voluntary and charitable sector could be doing far more than it does. I have never really understood, for example, why voluntary or charitable organisations should not be able to run more welfare to work or child care programmes. I have never understood why cancer charities should not be given the opportunity to run more cancer services. I would certainly like to see us building, as a society and a country, on the pioneering work undertaken by an organisation such as the Royal National Institute for Deaf People in negotiating substantial discounts on behalf of NHS patients on the supply of digital hearing aids and then going on to work with NHS hearing services in order to ensure that those aids can be properly provided and fitted to the deaf or hard of hearing.

My argument, unlike that of the Conservative party, is not that charities can or should replace the state, but that the public sector, the voluntary sector and the charitable sector should be partners rather than rivals. While charities can do much more, there is much that the state, for reasons of efficiency and equity, has to do. In truth, in this era of worldwide terror, mass migration and global competition in which we live, only Governments can provide security to citizens. Modern Governments, however, have another equally critical role—to empower more people so that the opportunities that some have always enjoyed are redistributed more widely in our society and it is here, I believe, that the charitable and voluntary sector comes into its own.

The potential is already there, but I believe that realising it will require a new drive to bring in the sector from the cold. That depends, first, on the Government providing fair rules and fair funding. A good start has already been made, but Ministers recognise that there is more to do. Secondly, it depends on the sector—charities and voluntary organisations alike—putting its own house in order. Charitable organisations, just like private or public sector organisations, cannot expect to get something for nothing. The Parliamentary Secretary, my hon. Friend the Member for Doncaster, North (Edward Miliband) is quite right that, to get a better funding regime, charitable organisations need to demonstrate the added value that they can bring to our key public services. They need to be clearer about what they are promising and what they can deliver and they need to get tough about the value of their work, not just its cost.

Thirdly, charitable organisations need a system of regulation and law that allows them to demonstrate that they are fit for purpose as they broaden their role and provide more services. That is where the Bill, in my view, becomes so important, but has a delicate balancing act to perform. On the one hand, it needs to assure the public that there is probity in the charitable sector as its role expands. On the other, it needs to avoid the temptation of over-prescription and burdensome regulation. It is worth recalling that, according to one survey at least, charities come second only to churches in the public’s league table of trustworthy organisations. They have a trustworthy rating of 48 per cent. By contrast, Government have a rating of 6 per cent.

As much as that?

For the hon. Gentleman’s benefit, political parties have a rating of 1 per cent. I am not sure whether the Liberal Democrats score. The Joint Committee was especially keen to ensure that smaller charities did not find that their volunteers and necessarily limited resources were swamped by paperwork, more red tape or over-regulation. We took evidence from organisations that represent small charities and heard their concerns about that. We made a series of suggested changes to the draft Bill as a result. I am personally pleased that many of our recommendations have been taken on board in the Bill.

I am listening with great interest to the right hon. Gentleman’s comments. There are great dangers in over-prescriptive regulation and we often complain about that, but I hope that he accepts that the flipside of the coin can be unduly ambiguous legislation and that the Government would want to avoid that, too. Earlier, the hon. Member for High Peak (Tom Levitt) spoke powerfully about independent schools sharing facilities, to the public benefit, and how that might be viewed as a criterion for retaining charitable status. I do not object to that—it is perfectly sensible. Does the right hon. Gentleman agree that another way forward might be to say that, if those independent schools can prove that they provide permanent access to people from low socio-economic groups, it might also be proof of their public benefit?

The hon. Gentleman makes an interesting and telling point. I received an interesting letter from the Independent Schools Council, which, as many hon. Members know, represents the vast majority of private schools and charitable private schools.

Public schools.

Yes. It is confusing—the schools are public but they are private. When I say private, I mean public. I hope that that has clarified the point.

Jonathan Shepherd of the Independent Schools Council gave evidence before the Joint Committee and he made an interesting point in a letter to me dated 22 June. He referred to the presumption that the hon. Member for Isle of Wight defended: because an organisation is educational, it is automatically charitable. The letter stated:

“The presumption has sheltered lazy charities because they did not have to demonstrate public benefit… The new Charity Commission checks will not allow charities to get away with being lazy or disengaged from society.”

The hon. Member for Buckingham (John Bercow) therefore makes a good point. Perhaps he could make it privately—or publicly—to the hon. Member for Isle of Wight.

On regulation or deregulation, the charitable incorporated organisation, which is the new legal form for charities, to which my right hon. Friend the Minister referred, is genuinely deregulatory. It avoids the need for dual registration that most charities currently experience. Similarly, the advent of a legal appeals mechanism through the charity tribunal is an important antidote to the additional powers that the Bill gives the Charity Commission. I welcome the fact that the Government have agreed with the Committee’s call for a review of the burden of regulation on charities. I believe that that review is now under way.

It is slightly less welcome that the Joint Committee’s recommendation that the Charity Commission should be required to use its powers proportionately, fairly and reasonably has been only partially incorporated in the Bill. As my right hon. Friend suggested, the word “proportionate” appears in the measure. However, “fairly” and “reasonably” do not. One out of three is not too bad but given the genuine concerns that were expressed in another place and the continuing need to reassure especially the smaller charities that they will not face some sort of Big Brother Charity Commission with extensive new powers at its disposal, I hope that my right hon. and hon. Friends might be able to go a little further.

If the balance can be got right, regulation as proposed in the Bill can be a protection, not a distraction for charities. Part of the purpose of the Bill, the Committee was told by the Government, was to protect the charity brand. We heard evidence from elsewhere in the world—I remember in particular the evidence that we received from the United States of America—about how organisational and regulatory failure had combined in a succession of scandals affecting individual charities, such that the charity brand was contaminated and public confidence in charities severely dented. In that sense, charities face an especially tough accountability test. They rely ultimately on public giving, so they must be confident of public support. As we know, however, there is much public confusion about the most basic of facts: what qualifies to be a charity and what does not. There is a perception gap between what people think is, or at least should be, charitable and what is charitable according to the law. We know, for example, that 97 per cent. of people surveyed think that Oxfam is and deserves to be a charity. Only 15 per cent. of people think that Tate Modern—not too far from this place—is a charity. Fewer still think that Eton is a charity. Closing that perception gap is clearly important if charities are to enjoy continued public confidence.

I apologise for my late arrival at the debate—I had other parliamentary commitments this afternoon. The right hon. Gentleman will recall that I served on the Committee under his chairmanship. I shall put the point to him now that I put in the Committee. Does he agree that were Eton to have a flag day, people might accept that it is a charity?

The hon. Gentleman might want to put that point to the provost of Eton rather than to me.

The Bill’s answer is to introduce a public benefit test, which all charities will have to pass in order to gain charitable status. Unlike the Conservative Front-Bench spokesman, I very much welcome the introduction of that test. We must concede, however, that it is by far the most controversial aspect of the Bill, particularly when it applies to private hospitals and private schools. It was certainly the issue that took up most time on the Joint Committee, with many different points of view represented, and it sparked sometimes fierce debates in the other place. The Committee concluded:

“Since the purpose of the Bill, according to the Minister, is to protect the charity brand, it is important that any new law on charity must properly deal with the issue of public benefit.”

For some, this is deeply ideological terrain. There is antipathy in some quarters— even, I guess, among those on these Labour Benches—towards private education per se. That is not my starting point. For me, politics is not about taking things away from people, or levelling down, but about giving things to people—levelling up. That is why I support the proposition that we should have more choice, not less. It is also why I am a long-term advocate of partnerships between the public and private sectors. The widespread recognition nowadays that the old divide does nobody any good is welcome. In the national health service, for example, partnerships between public and private sectors are now commonplace and, for most patients, welcome.

As the briefing that all Members received recently from the Independent Schools Council demonstrated, many enlightened private schools have made a great effort to open their doors to the wider community. Partnerships with state schools to teach minority subjects, to develop distance learning materials, to undertake summer schools and even to prepare pupils for university have been fostered. Therefore, we know that partnership can deliver the goods. The creation of both city academies and trust schools provides further opportunities to make partnerships between private and state schools even more meaningful and to help to bring an end to the educational apartheid that has in the view of many been so damaging to schooling in our country.

Where private schools engage in such partnerships, they make a good case for providing genuine and direct benefit to the wider public. The argument that we heard on the Joint Committee that private schools deserve charitable status because they save the taxpayer money by educating children who would otherwise have to go to the local state school, however, is not helpful to their case. That is both a fallacious and deeply complacent argument. On the same basis, private gyms, I presume, might become charities, as it could be argued that they dampen demand for local authority facilities and so reduce the cost to the public purse.

Charitable status should not be a given; it should have to be proven. While many private schools make their facilities available to state schools, the latest report by the Independent Schools Council—“Good Neighbours”, published in 2003, which is about relationships between state and private schools—says that the majority do not, and that

“absence of charitable status makes little difference to… a school’s willingness to make its facilities available.”

When, according to the Independent Schools Council’s own report, 48 per cent. of private schools that are charitable never make any of their facilities available to state schools, people are bound to ask what the public get back for the £100 million of public expenditure that such schools enjoy in tax benefit earned as a direct consequence of their charitable status. At present, only some can answer that question. In future, all will have to be able to answer it, because the Bill removes the automatic presumption that every educational venture is, by dint of being educational, also charitable. Instead, it introduces the much-decried public benefit test.

Public expenditure is not, and cannot be, a free good. It rightly comes with strings attached: it must be a something-for-something deal—in this case, tax advantage in exchange for public benefit. I have no objection to that principle. Indeed, I think it is a principle that we should enshrine far more fairly than we do at present, and that applies as much to private charitable hospitals as to private schools.

Would the right hon. Gentleman apply that to any form of tax relief?

We are not discussing any form of tax relief, but leaving that aside, I think it no bad thing to ask what we are receiving in return for public expenditure. The hon. Gentleman may not think that it is public expenditure, but it could at least be described as public expenditure forgone. As he would be the first to say, it is not our money; it is the taxpayer’s money. It just so happens that when we are in government, we are responsible for applying different purposes for the taxpayer’s money. It seems to me a good principle that when people work hard to earn money and pay it into the Exchequer, we, as custodians of the public purse, should say “Here: this is what you get back.” If the hon. Gentleman is inclined to say that that applies to some areas of public expenditure but not others, I think people are entitled to ask him why he thinks that a level playing field should not apply to all areas of public expenditure.

The right hon. Gentleman knows that that was the key point raised in the scrutiny Committee, and the point of greatest contention. Surely what we should be pointing out today is that after a great deal of discussion, some of it very heated, the entire Committee was able to camp on the position set out in our report, which the Government have endorsed. Will the right hon. Gentleman urge his right hon. and hon. Friends not to try to unpick a deal with which everyone can live?

I think that I have done quite a bit of urging already in my speech, but the hon. Gentleman is right: we had heated discussions, but we reached a consensus. I shall say more about that shortly.

In the “costs” column of the cost-benefit analysis applying to private schools, my right hon. Friend lists only the estimated cost of various tax reliefs. Should he not also have included an estimate of the cost of the damaging impact on local state schools of academically selective, socially divisive schools in the community that tend to cream off the most motivated and academic young people?

We addressed that point in questioning the various representatives of the private school sector who appeared before the Committee. I am not here to defend private schools or otherwise; what interests me is whether the public receive benefit in exchange for the expenditure that we make on their behalf. That is my fundamental concern.

If properly applied, the public benefit test could drive forward partnerships between the private and the public sectors and, in particular, between private and state schools. I was very taken with the evidence to the Committee of one private school head teacher when he argued that the new public benefit test will accelerate the trend for the rest to follow the lead of the best. Indeed, the Independent Schools Council has welcomed the Bill and its general secretary, Mr. Jonathan Shephard, told the Joint Committee that he agreed with the proposition that the new test should be used as a lever to get more schools to provide more public benefit.

And here we need to be certain that the Bill will do what it purports to do. On that count—notwithstanding strong differences of opinion on the question of the charitable status of individual schools and hospitals—the Joint Committee had grave concerns. Those concerns were accentuated by evidence from the Charity Commission that the public benefit test as defined in the draft Bill would have no impact on the charitable status of private schools or hospitals. That led us to conclude that

“while a detailed statutory definition of public benefit would be too inflexible, nonetheless there is a need for a more explicit definition of public benefit in connection with the Bill.”

We went on to recommend that a set of principles should be included in the Bill or in Government guidance. New clause 4 requires the Charity Commission to issue such guidance which it has already helpfully drawn up in draft form.

The challenge now for Ministers is to assure themselves and the House that the clause and the draft guidance are clear enough in setting the framework for the Charity Commission to guarantee public benefit; otherwise there is not much point in introducing a new test. In evidence to the Joint Committee, the Government told us that the public benefit test was intended to have teeth. Providing it bites, that test can guarantee that all charities—including private schools and private hospitals—do what only some currently do: provide public benefit that is direct not indirect, high not low, and meaningful rather than tokenistic. That after all is the direction of travel shared in common by all political parties, the Government, the opposition on the Joint Committee, charities, organisations representing charities, individual schools and the Independent Schools Council.

Getting the public benefit test right is central to guaranteeing public confidence in what charities do. Charities do good. Few if any Members of Parliament or the public would disagree with that proposition. But in a world where accountability is tougher, scrutiny is greater, and the role that charities play is potentially wider, the assumption of good is simply not good enough. It has to be proved. I welcome the Bill because it provides a golden opportunity for charities to do just that. It will make a huge difference to the work of charities and the wider charitable and voluntary sector, and to each and every one of the communities that we represent.

I must declare some non-pecuniary interests, as a member of the Institute of Fundraising, a patron or friend of various local charities in Gloucestershire, and a trustee of the UK’s leading blindness research charity, Fight for Sight. That is not the first plug we have had for a very worthwhile charity in this debate and I am sure that it will not be the last.

I also welcome the new ministerial team and congratulate them on bringing this Bill before us after so long a wait. Credit is also due to the right hon. Member for Darlington (Mr. Milburn), my hon. Friend the Member for Colchester (Bob Russell) and the hon. Member for Sutton Coldfield (Mr. Mitchell), who contributed to the long periods of effective scrutiny and the welcome degree of consensus that has been achieved—at least, until today—although I cannot go along with the rather extreme penalties, such as beheading, that the right hon. Member appeared to recommend for some of the dissenters. In any event, I pay tribute to the Joint Committee’s work.

This Bill has been so long in preparation that I remember briefing voluntary sector colleagues on the new Charities Bill that I thought was to become law imminently long before I was even a candidate for Parliament, let alone an MP. Now that we are finally debating it in the Commons, I hope that with the help of a sufficiently brisk and efficient Committee stage, we might just see it complete its passage before the summer recess. There will certainly be groans of disappointment from my former colleagues if we allow it to be delayed by another three months. However, all credit to the ministerial team for having rescued it from the long grass at all.

To extend the horticultural analogy, Ministers have entered an area of public policy that is like a huge garden, worth billions of pounds in income, as the Minister said, and which employs 600,000 people, according to the National Council for Voluntary Organisations. It is a garden in which Ministers are just visiting gardeners, and they would do well to tread carefully. The garden has diverse species of many colours and sizes. It has plants as different in size, function and characteristics as daisies and oak trees: from Cancer Research UK, with its £240 million income and huge marketing budget, to wonderful but hard-pressed charities in my constituency, such as Cheltenham Open Door and Cheltenham Community Projects; from democratic membership organisations with large volunteer bases to highly specialist trusts; and from charities that only sell Christmas cards to important service providers whose fees pay for the education, care and support of large numbers of the most vulnerable in our society. This Bill must look after the interests of them all.

If left unattended, the garden will not wither—probably quite the reverse—but weeds will creep in, often looking pretty at first, but threatening the future reputation of the whole. However, if the garden is cultivated and nurtured, it will flourish, grow and produce enormous benefits for us all.

With this Bill, the Government show every sign of not charging in with a mechanical digger, as they have in a few other areas of legislation and policy. The careful and consultative approach has brought them the overwhelming support of the voluntary sector, and I am pleased to say that the Bill continues to enjoy the full support of the Liberal Democrats, too.

There are many benefits of a new Charities Bill. I highlighted them to my colleagues all those years ago, and I still commend them to the House today. They include many of the practical steps that the Minister outlined, which will make easier the roles of trustees, finance directors, company secretaries, and treasurers in particular. I am sure that those measures will be much appreciated.

We all have delicate balances to strike between the voluntary foundation of the best charities and the professionalism demanded of them in today’s risk-averse world, and between the need to regulate and avoid the misuse of publicly donated funds and the risk of over-burdensome red tape. Public opinion will punish us either way if we get those balances wrong.

Public opinion is also a strong factor in the Bill’s fundraising provisions, which we might have expected to be more contentious. However, I am pleased that the Institute of Fundraising fully supports them as proportionate and equitable. As a paid-up member still, I shall follow my institute’s lead in the hope that the provisions do not impact unduly on the income of national charities or increase too much the bureaucracy with which they have to deal.

I was a little upset by the Minister’s reference to chugging. I do not know whether she knows this, but it is short for charity mugging. It is an insulting reference to hard-working paid and unpaid charity fundraisers, and I hope that she will avoid it in future.

From fundraising to campaigning, the new heads of charity recognise among other things the importance of what might be called campaigning functions, such as the prevention as well as the relief of poverty, the advancement of human rights and the promotion of religious or racial harmony, equality and diversity. That is in line with previous Cabinet Office policy advice that charities should not keep the experience of their front-line work to themselves, but should be encouraged to share it with legislators and decision makers such as ourselves, and, where appropriate, campaign for change. It is right that we no longer ask charities to witness poverty, injustice, ill health or cruelty, but not to speak out about the fundamental causes of those ills.

To put my point into new Labour-speak, the direction of travel is broadly good. However, I agree with the hon. Member for Stroud (Mr. Drew), who is no longer in the Chamber, that the Bill, perhaps out of necessity because it is not a Finance Bill, leaves out a big issue—VAT. The Minister was worried that including such a provision would mean a bill for half a billion pounds, but that is exactly the bill faced by charities at present because VAT is not recoverable. We cannot address that question in this debate but we might find a way of doing so in Committee, perhaps through the reporting measures proposed in part 4—no spending commitment implied.

The new heads of charity will provide a level playing field as between the educational, religious and poverty charities, mentioned by the hon. Member for Isle of Wight (Mr. Turner), which did not previously have to pass a public benefit test under various Charities Acts, and the vast number of organisations that had to pass such a test. They range from St. John Ambulance, which saves lives in local communities, to Survival International, which works for the rights of tribal peoples around the world. It is right, as Lord Hodgson of Astley Abbotts said, that

“all charities should have to meet a public benefit test, no matter what their purposes”.—[Official Report, House of Lords, 28 June 2005; Vol. 673, c. 154.]

The question whether we should add clarification and guidance to the Bill’s provisions on public benefit is already generating a lot of hot air outside this place. On the one hand, the Independent Schools Council is lobbying hard against any strengthening of the public benefit test, and schools such as Fettes college in Scotland are talking about the “politics of envy”. On the other, a former aide to Cherie Booth, writing in The Guardian this weekend, predicted “class war” headlines. So far, so unhelpful.

Today, we witnessed the astonishing spectacle of the official Conservative spokesman setting out in the House of Commons an even more reactionary position than the one advocated by his noble Friends in another place. In effect, he argued for the insertion of a special status that would require a public benefit test of St. John Ambulance but not of Eton college. That is an astonishing position. I do not know whether the Leader of the Opposition is aware of what his hon. Friend is proposing, but it does not sound like the new model Conservative party to me.

The Minister gave reassuring responses to various interventions about the bodies and organisations that would not be affected by the Bill’s public benefit test, but as the right hon. Member for Darlington said, it would seem desirable that such brave new legislation should make some kind of difference to somebody in terms of the public benefit test. I shall, therefore, clarify the Liberal Democrat position, which has been consistent throughout the Bill’s long history. Along with the NCVO and the Charity Commission in some of its guidance, we believe that the current public benefit test leaves the law in a muddle and that the Bill needs to be strengthened in that respect. I draw the attention of Members to the comments signed by Stuart Etherington of the NCVO, David Harker of Citizens Advice, Michael Lake of Help the Aged and John Low of the Royal National Institute for Deaf People. They say:

“Clarity is vital if we are to secure a level playing field for all charities operating today and for others being formed. If the public believes access to a charity’s services is unduly restricted because of high fees, or for any other reason, the case for charity will be undermined. We hope that MPs will support our call for clarity and put this vital question beyond doubt.”

The Bill does not yet do that.

An interesting new law has been passed in Scotland. Adopting its terminology, which was supported by Labour and Liberal Democrat Ministers north of the border, would seem to have much to commend it, not least the obvious advantage of consistency. That is not compulsory, but it is clearly desirable for charities that operate both north and south of the border.

The ISC is simultaneously lobbying against such clarification and advising its members on how to respond to the tightening of the law on public benefit. Its 2005 briefing on the subject stated:

“Schools should, therefore, be fully prepared to demonstrate public benefit as early as possible, and not later than the autumn of 2007. ISC advice for the past year has consistently been that schools should audit the public benefit they provide, and should be prepared to think imaginatively of ways of extending public benefit.”

I could not put it better myself—exactly the outcome that Liberal Democrats seek.

Today, I consulted Tim Hastie-Smith, the headmaster of Dean Close school, an independent school in my constituency, who told me that

“schools are big money-making ventures whether they like it or not. How can we look the public in the face as charities unless we are doing things that are obviously charitable in their intent?”

Before the Minister nods too much, I should tell her that Mr. Hastie-Smith told me that he supported strengthening the public benefit test and thought that Dean Close school had nothing to fear from it. I suspect that the hon. Member for Buckingham (John Bercow), who is also no longer in his place, might even support that, judging by the sentiment of his intervention.

Having enjoyed Dean Close’s excellent theatre facilities—not because I pay fees, but as the parent of a local four-year-old in a wonderful community-based dance production—I fully understand Mr. Hastie-Smith’s confidence. He also cited the example of Christ’s Hospital, which has the kind of endowment fund that the Charity Commission might rightly look twice at in any charity, but which has such a good record of charitable activity that it too would be at no risk from a reasonable public benefit test of the kind that we would support.

I support the way in which the people to whom the hon. Gentleman has been talking are speaking about public benefit. The issue is the means of getting there. There is much argument among lawyers about whether anything new would bring clarity to the whole sector or whether including something else in the Bill would bring further uncertainty, given that we are talking about something that, up until now, has largely been delivered by case law. That case law would have to be undone and we would have to start again. I wanted to assure him that we all will the ends; the question is, what are the right means to achieve those ends?

I am grateful to the Minister for that intervention. It bodes well for Committee, where we may be able to find constructive ways through the issue. Having said that, I am still puzzled by her comments. She says that she is going to use the precedent of existing law, which relies on case law, but the Charity Commission, in its current guidance, says that the law is confused and it has not been able to provide suitable clarity through regulations and guidance to satisfy organisations such as the National Council for Voluntary Organisations, the Royal National Institute for Deaf People and Help the Aged. I stick to my initial assumption that we need to follow that advice and provide more guidance in the Bill. I do not see why guidance in the Bill is so much more threatening than guidance provided elsewhere.

The Charity Commission goes on to say that it would have to be absolutely clear that any further—I cannot remember the exact words—deliberation did not bring with it unintended consequences. That is precisely what I am referring to. Clarity in one aspect may bring a lack of clarity in other aspects in terms of how the public benefit test was to apply to other charities.