I begin by adding my congratulations to my noble friend on her new role, and congratulate her on having so far descended the crest unscathed. Her officials certainly gave her—or parliamentary procedure gave her—a good mixture to begin with, starting off with IP, proceeding to employment regulations and now to company law.
I declare my long interests in the charitable world. As my noble friend Lord Wallace of Saltaire knows, I conducted the Government’s review of the Charities Act, and I have an interest in how CICs and the charitable sector work together. I do not oppose these regulations, but I would like just to draw attention to a potential danger. Then I have one specific question to which I would appreciate clarity from my noble friend.
We have a broad spectrum of organisations. We start at one end with limited companies, commercial companies, with which we are all familiar, and at the
other end we have charities, which are severely and properly legally restricted. Everything has to be done by them for the public benefit. To fail to do so is breaking the law and opens the trustees to the full force of that law. Between those two extremes—limited companies at one end and charities at the other—there is an increasing number of corporate forms, one of which is the CIC. There are also community benefit societies—bencoms, as they are called—we had better have some new regulations for them; industrial provident societies; social enterprises that are not CICs; companies limited by guarantee that are not CICs; mutuals; charitable incorporated organisations; and CICs themselves.
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I see the value in diversity. One does not want to be a one-club author. But we need to ensure that the public are clear about what all these organisations do, what their powers are and what they are permitted to do. Each of those organisations started out with a very clear differentiation in the law but sometimes those differences are being whittled away, on the grounds of utility, practicality and efficiency. This is one small whittling away. Does it really matter? Probably not but my concern is that we have this basic charity movement—165,000 registered charities doing wonderful things for our society and probably double that number if you take the unregistered ones—which is highly and hugely respected by the public.
The danger is that we create organisation forms that appear to the public to be charitable but are not entirely so. If there are scandals and difficulties, that may serve to undermine the trust that the public have in charities pure and simple, which remain the mainstream of our voluntary and social endeavour. Charities are already on the defensive due to, for example, the Cup Trust and the accusations of tax avoidance; the issue of executive salaries—what should the major charities pay their chief executives; and of course the even more vexed question of charitable aid going to extremist causes overseas.
I accept what my noble friend says, that the asset lock is critical, and certainly if she were to say that the asset lock will be changed, that would be a red signal as opposed to a yellow one, which I think we have this afternoon.