A term of change
6 October 1997
While the Queen's Speech did not feature an explicit reference to the voluntary sector, it did contain points of interest and importance to charities.
Highlighted as priorities for the Government were education, employment, housing, public health, international development and human rights - areas where charities play a vital role.
Changes to the National Lottery were promised, with a fund to be created from the mid-week draw to support education and health projects. Cancer relief charities will have been pleased by the commitment to ban tobacco advertising.
Charities are apprehensive of the first Labour Budget in July. There are widespread fears that plans to change company taxes by reducing advance corporation tax would hit charities hard. It has been calculated that complete withdrawal of the relief would cost charities £250m a year, although it is perhaps more likely that the immediate impact on them and other tax-exempt funds, primarily pension funds, would be reduced by transitional relief.
The investment field is one area in which charities will be lobbying the new Government. Long-awaited changes to the Trustee Investments Act just failed to get through Parliament before the election.
Charities complain that the restrictions on investment freedom contained in the Act have cost them millions of pounds of lost investment opportunities. But it seems unlikely this will be high on the Government's list of priorities. The changes proposed previously were being implemented as part of the deregulation initiative and charities will no doubt be keen to see this initiative continued under the new Government.
The National Lottery immediately attracted the attention of the Government when details of the bonuses of Camelot executives hit the news. The lottery produced £1.27bn for good causes in 1996, but there is continuing unease in the voluntary sector over the lottery's impact on traditional charitable giving. There is already talk about the lottery being run on a non-profit-making basis.
Changes in governments and legislation are of transitory importance when viewed in the context of the long history of charity law stretching back to the Statute of Elizabeth in 1601. Of greater concern is the possibility of fundamental change to the legal definition of "charity" and charitable status.
In 1996, the Deakin Report (published by the Commission on the Future of the Voluntary Sector) advocated reform of charity law with a single definition of "charity" based on the concept of public benefit. This would replace the four traditional "heads" of charity: relief of poverty, advancement of religion, advancement of education, and other purposes beneficial to the community.
Many charity lawyers would view such a change with concern, believing the traditional approach has proved itself capable of reacting to changes.
For instance, in a recent case in Canada, it was decided the provision of access to the Internet was charitable, because it is analogous to the reference to the repair of bridges and highways in the Statute of Elizabeth. It is proof that the old rules are still relevant.
At about the same time as the Deakin Report was published, the Charity Commission initiated the first review of its register of charities, and divided up the 184,000 charities into their different areas of work. There is speculation as to what use they will put this information.
The signs are that some traditional areas of charity may have their entitlement to charitable status questioned, unless they can show clear public benefit deriving from their work.
In particular, charities in the private education and health sectors, whose services are only available to the few who can afford them, need to be alert to change. Such charities should be considering how to anticipate any challenge to their status, perhaps by ensuring public availability of their resources.
Some independent schools, prompted also by the phasing out of the assisted places scheme, are already focusing on their ability to provide free access to their schools.
According to the National Audit Office's new report on the Regulation and Support of Charities, registered charities in England and Wales have an annual gross income of £16bn and manage resources which include assets worth over £35bn.
This same report shows over 11,000 new charities were registered by the Charity Commission in 1995-96. It is a sector that demands committed support from lawyers and other professionals.
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