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We don't like your charity, so we'll close it
By Alasdair Palmer
Last Updated: 12:01am GMT 05/11/2006

Next week, the new Charities' Bill will finish its passage through Parliament. It should become law before the end of the year. In spite of being billed as "the biggest review of charity legislation in the past 400 years", it has generated very little comment. This is surprising, because the Bill will vastly increase the power of the Charities' Commission to dissolve charities, confiscate their endowments and assets, and give them to what the Commission considers a more genuinely "charitable" cause.

That threat is alarming and real. It used to be taken for granted that organisations devoted to education, to religion, or to the relief of poverty, were automatically providing a "public benefit". The new legislation dissolves that assumption. Even more worryingly, it also leaves it up to the Charities Commission to decide what constitutes a "public benefit". There is no guidance in the legislation on how that slippery notion should be defined. Ministers and members of the Commission have referred to "case law", but there is almost none, precisely because, for the last 400 years, there has been so firm a consensus that education, religion and the relief of poverty constitute public benefits.

It means that the Commission will be able to use whatever definition of "public benefit" it likes. The motive behind redefining that notion seems to have been the desire to ensure that charities benefit all the public, not just some small section of it. That is why, for instance, schools and hospitals that charge fees are being threatened with the withdrawal of their charitable status: they are said only to benefit people who can afford to pay, and not the whole of the British public. In fact, every charity benefits a portion of the population rather than all of it: charities for disabled people benefit those who are disabled; hospital charities benefit sick people; charities for women benefit women rather than men… and so on. Charities for starving farmers in the Third World do not benefit the "public" in this country at all. And as for charities for animals, they do not benefit people of any description, unless you count the pleasure some people get from knowing that animals are being cared for.

So will the Charities' Commission now declare the RSPCA and the hundreds of other organisations that dispense money and care only for animals, or only for men, or only for children, or only for people in the Third World, as ineligible for charitable status because they do not benefit the whole British public?

The preposterousness of that idea is obvious, and it demonstrates that the "public benefit" test will, in practice, simply amount to the bureaucrats on the Commission deciding whether they approve of the aims of a given organisation. If they do, it will be allowed charitable status and reap the enormous benefits that flow from it, from tax-breaks to the possibility of organising public collections. If they do not, the Commission will declare the organisation no longer a charity. And then, under the new Bill, its endowments can be seized and given to a charity of whose aims the bureaucrats do approve.

This is a terrifying extension of arbitrary, unaccountable state power, albeit under the guise of a quango rather than a government department. The charity sector is one of the few parts of modern Britain that actually functions pretty well at the moment. It is vigorous and effective, and provides services worth billions every year, largely because the Government hasn't managed to get its paws all over it. This new law is going to change that. Unfortunately, it now seems too late to do anything about it. And this time, the whole British public will be the loser.