REFORM OF THE HOUSE OF LORDS
The long-awaited proposals for the final (?) reform of the House of Lords were published on 15 May.Footnote 1 Though the draft Bill envisages a House with 240 elected members and 60 appointed members nominated by a statutory Appointments Commission and recommended for appointment by the Prime Minister, the White Paper states explicitly that ‘it is a draft and we will consider options including a wholly elected House’. Probably the key proposal for readers of this Journal is that a maximum of 12 Church of England bishops would sit ex officiis in the reformed House, in addition to the 60 appointed members. Unlike the other members, the bishops will not be paid in respect of their membership, and the provisions of the draft Bill on taxation, suspension and expulsion and the majority of the disqualifying grounds will not apply to them. Over time the number of bishops in the Lords will be reduced from the initial 12 to 7.Footnote 2
The Government has considered whether or not the bishops' continued presence might constitute discrimination on grounds of religion, contrary to Article 14 ECHR – but has concluded that it does not.Footnote 3 Its view is that the basis for the differences in treatment is the nature of membership of the House as Lords Spiritual, not the fact that the members are bishops of the Church of England as opposed to representatives of other Christian denominations, of other faiths or of no faith. The White Paper suggests that, if there were other members who sat ex officiis or part-time, it would not be unexpected if they were to be treated differently from full-time elected or appointed members: the fact that the proposals make no provision whatsoever for such other members appears to have been discounted for the purposes of that argument.
Lords reform has been on the political agenda, albeit somewhat sporadically, since the Wilson Administration's attempts at restructuring in the 1960s were blocked by an unlikely alliance between Michael Foot and Enoch Powell; and, so far as the arguments for reform are concerned, surprisingly little has changed. Your correspondent has already heard misgivings around Westminster that elected peers with 15-year fixed terms might begin to see themselves as serious rivals to the Commons and start challenging the latter's final authority, while some Conservative backbenchers in both Houses see the whole thing as just another sop to the Deputy Prime Minister. In some quarters at least, the feeling is that the draft Bill's ultimate metamorphosis into an Act of Parliament is by no means a foregone conclusion.
CARE OF CATHEDRALS MEASURE 2011
The Care of Cathedrals Measure 2011, which received Royal Assent on 24 May, consolidates with corrections and minor improvements the Care of Cathedrals Measure 1990 and a number of subsequent enactments relating to the care of cathedrals.
CHARITY LAW
England and Wales
On 4 March the Government published the Charities Bill [Lords] and the Charities (Pre-consolidation Amendments) Order 2011. One might have thought it somewhat perverse to bring forward a consolidation bill in advance of the five-year review of its operation that was written into the Charities Act 2006 – but that is what the Government decided to do. In a subsequent written answer in the Commons, the Minister for Civil Society, Nick Hurd, said that the timetable for the review itself had not been finalised but it was likely to take between six and nine months and conclude in 2012.Footnote 4
On another matter entirely, the Charity Commission has published the first part of its guidance on setting up a Charitable Incorporated Organisation in England or Wales, together with two model constitutions. It is intended to add to the guidance over the coming months.Footnote 5
Northern Ireland
In the previous issue we noted that it was doubtful that there would be sufficient time to enact the Executive's proposal to amend the Charities Act (Northern Ireland) 2008 in order to remove the uncertainty surrounding public benefit. In the event, the proposed legislation fell at the dissolution of the Assembly; however, the reason for its demise may have been confusion and lack of political will as much as shortage of legislative time.
On 17 February the then Minister for Social Development, Alex Attwood, told the Assembly's Social Development Committee that the Executive had ‘decided to re-introduce the presumption of public benefit test for religious institutions and maybe for organisations that deal with poverty issues’.Footnote 6 However, he also told the Committee that he personally disagreed with the Executive's decision because both the Assembly and Executive had originally concluded that the presumption of public benefit that had existed since 1608 should be removed.Footnote 7
The original intention of the legislation had been to clarify the confusion between English and Scots charity law in relation to the so-called ‘charity test’, and the proposal to restore the presumption of public benefit in the case of religion and the relief of poverty appears to have been an afterthought. Alex Attwood has now moved on to be Minister for the Environment and has been succeeded as Minister for Social Development by Nelson McCausland; whether or not the new Minister and the reconstituted Executive will seek to address either issue is not yet known. In the meantime, the uncertainty surrounding the charity test continues: not so much an Ulster fry as a dog's breakfast.
Scotland
From 1 April 2011 it became possible for new charitable institutions in Scotland to be formed as Scottish Charitable Incorporated Organisations (SCIOs) rather than as old-style charities under the Charities and Trustee Investment (Scotland) Act 2005; and the establishment of the first SCIO was announced on 13 April. Existing charitable companies and industrial and provident societies that wish to do so will be able to convert to SCIO status from 1 January 2012. The Office of the Scottish Charity Regulator has published guidance on setting up an SCIO and on conversion.Footnote 8
CIVIL PARTNERSHIPS
On 31 March the Government Equalities Office published a consultation documentFootnote 9 setting out proposals to implement section 202 of the Equalities Act 2010 relating to the registration of civil partnerships on religious premises in England and Wales.Footnote 10 The regulation-making power in section 202 is permissive and does not oblige any faith group that does not wish to do so to host civil partnerships. Moreover, the consultation has revealed an unexpected flaw in the wording of the section – which, it should be said, was drafted by the then Government in some haste in order to get the Act on the statute-book before the 2010 Dissolution.
Currently, under the terms of the Civil Partnership Act 2004, registrations must be entirely secular; and section 202 of the 2010 Act does not remove the prohibition on the registration of a civil partnership in the context of a religious service. So, even if and when religious premises become registered under the forthcoming regulations, it will still not be possible without further primary legislation to register a civil partnership in the context of a religious service: the registration and the religious celebration will have to be kept strictly separate. We suspect that this is not what the supporters of the original proposal had in mind.
COMMISSION ON A UK BILL OF RIGHTS
On 18 March the Government announced the membership and terms of reference of the long-awaited Commission on a UK Bill of Rights. The nine-member Commission, appointed jointly by David Cameron and Nick Clegg, will be chaired by Sir Leigh Lewis, lately Permanent Secretary at the Department for Work and Pensions, and includes leading human rights lawyers such as Anthony Lester, Helena Kennedy and Philippe Sands. It will investigate ‘the creation of a UK Bill of Rights that incorporates and builds on all our obligations under the European Convention on Human Rights, ensures that these rights continue to be enshrined in UK law, and protects and extend our liberties’.Footnote 11
DEFAULT RETIREMENT AGE
The Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 came into force on 6 April.Footnote 12 They repeal and amend provisions in Schedule 9 to the Equality Act 2010 (and repeal and amend related provisions in the Employment Rights Act 1996) that except certain dismissals made on the basis of retirement from constituting direct age discrimination and unfair dismissal: in short, the end of compulsory retirement at 65. An employer who seeks to retire an employee who reaches retirement age after 30 September 2011 risks a claim of age discrimination unless an objective justification for retirement at that age can be demonstrated: capability, conduct or ‘some other substantial reason’ for the purposes of section 98(1)(b) of the 1996 Act.
It should be noted that the Regulations apply only to employees. Office-holders are a different category; and whether or not an individual minister of religion is an employee or an office-holder for the purposes of the Employment Rights Act seems to depend on the facts of the case: for the most recent examples of its application see Macdonald v Free Presbyterian Church of Scotland Footnote 13 and Moore v President of the Methodist Conference.Footnote 14
ECCLESIASTICAL FEES (AMENDMENT) MEASURE 2011
The Ecclesiastical Fees (Amendment) Measure 2011, which received Royal Assent on 24 May, amends the Ecclesiastical Fees Measure 1986. The amendments are largely concerned with the legal framework for parochial fees, but changes are also made to the arrangements for setting the fees payable to ecclesiastical judges and legal officers. The main changes to parochial fees are the replacement of the incumbent's fee by a fee payable to the Diocesan Board of Finance, the establishment of a list of services and other matters in respect of which parochial fees may be prescribed (to which reference will be made instead of to the current statutory definition of ‘parochial fees’), power for the Archbishops' Council to prescribe fees (including increases) for a period of up to five years, and provision of an express power to prescribe the costs and expenses to be included within the statutory fees.
MISSION AND PASTORAL MEASURE 2011
The Mission and Pastoral Measure 2011, which received Royal Assent on 24 May, consolidates with corrections and minor improvements the Pastoral Measure 1983 and a number of subsequent enactments that have supplemented or amended it, together with parts of the Dioceses, Pastoral and Mission Measure 2007.
TAXATION, GIFT AID AND ‘FIT AND PROPER PERSONS’
Gift Aid and small donations
In the March Budget the Chancellor announced that, from April 2013, charities and community amateur sports clubs that receive small donations of £10 or less will be able to apply to HMRC for a repayment of tax at the standard rate on the same terms as Gift Aid without the need to obtain written declarations from donors. There will be an annual limit of £5,000 – which means that the maximum annual rebate will be £1,000 for each charity. In order to qualify to make claims under the proposal, a charity will need to have been recognised by HMRC for Gift Aid purposes for at least three years, to have been operating Gift Aid successfully throughout that time and to have a good tax compliance record.
The Government was to consult representatives of the charity sector on the details of the new scheme over the summer; and how the new regime will work out in practice remains to be seen. For example, if an individual puts two £10 notes into the collection the person counting the money cannot know that they were given as a single £20 donation. The onus will be on church treasurers to act honestly, and the assumption is that HMRC will not inquire too closely into the details of the payments so long as the individual charity's claim does not exceed the £5,000 cap.
The new arrangement will go a long way towards making loose collections less tax-inefficient; but it should be noted that the £5,000 limit will apply to individual charities, not to individual congregations. For the Church of England, for example, because each PCC is a charity it will be able to claim in its own right; for a Church that has registered regional groupings of its congregations (such as presbyteries) as a series of single charities, the concession will prove less valuable.
HMRC and the ‘fit and proper persons’ test
In February HMRC published revised and much less draconian guidance on the operation of the ‘fit and proper persons’ test for the purposes of Schedule 6 to the Finance Act 2010.Footnote 15 Under the revised guidance, HMRC will assume that all those appointed by charities are ‘fit and proper’ unless it holds information to the contrary. In addition, provided that charities take appropriate steps on appointing personnel, they may assume that they meet the management condition in paragraph 1 of Schedule 6 at all times unless, exceptionally, they are challenged by HMRC; and tax reliefs and exemptions will not be withdrawn during an enquiry into whether or not a charity meets the management condition.
Substantial donors
The Finance Bill 2011 included new rules on ‘tainted donations’ to replace the widely disliked legislation on substantial donors to charities. While churches are not normally substantial donors themselves, they are sometimes the recipients of substantial donations – and the current law applies as much to recipients as to donors. The new rules will place any penalty on the donor rather than on the recipient charity except where there is evidence that there has been collusion between the two: in short, where the ‘charity’ itself has been set up as a scam and the trustees are acting under the improper influence of the donor.
