Unusual use of powers: DCMS purports to change effect of Act of Parliament by commencement SI

On 14 November, Civil Society minister Stephanie Peacock signed a statutory instrument, to bring into force the beleaguered provisions on “ex gratia” moral payments in the Charities Act 2022 with effect from today, 27 November.

The regulations exclude certain property in the collections of 16 statutory national museums and galleries – and in doing so risk sidestepping Parliament and overstepping the limits of Secretary of State’s authority.

Ex gratia and the new law

For a long time, it has been the law that charities may make disposals of charity property on the grounds that the charity trustees consider they are subject to a moral obligation, in addition to situations where the disposal furthers their charitable purposes. Re Snowden [1979] 2 All ER 172 confirmed that the Attorney General could authorise these payments; and the discretion has been exercised by the Charity Commission.

In 2005, in Attorney General v Trustees of the British Museum [2005] 1089 EWHC, it was held that, given the sovereignty of Parliament, the current common law ex gratia regime cannot be exercised by the Attorney General (/Charity Commission) to allow a disposal of property where there is an express statutory provision prohibiting it.

In 2017, the Law Commission reviewed the state of charity law generally and produced a report, Technical Issues in Charity Law. In this document, it reported that the British Museum case (which the report cited) created an illogical discrepancy. The ex gratia regime was, it seemed, available to non-statutory charities, but not to statutory charities – with no clear rationale for the difference.

It therefore proposed wording which was ultimately adopted without substantive amendments in s.16 Charities Act 2022.  The bill included the following wording, to clearly rectify the inconsistency:

In relation to a charity established by (or whose purposes or functions are set out in) legislation, [the power to apply to the A-G/CC] is not disapplied only because the legislation concerned prohibits application of property of the charity otherwise than as set out in the legislation.

The explanatory notes – originally drafted by the Law Commission and substantively carried over to the Bill as considered by Parliament – could not be clearer that this was the intended effect. The Law Commission said:

As noted in paragraph [x] above, it had been decided that the Attorney General had no power to authorise ex gratia payments by a statutory charity… The new section 106(1) creates a stand-alone statutory power for the Commission, court and Attorney General to authorise ex gratia payments. The power can therefore be exercised in relation to any charity, including a charity established and regulated by statute whose governing Act contains a general prohibition on the charity’s assets being used otherwise than for the charity’s purposes. The power will also be capable of use in respect of Royal Charter charities whose governing documents might include a similar prohibition on using the charity’s assets otherwise than for the charity’s purposes, since a statute takes precedence over a Charter. Nevertheless, to put the matter beyond doubt in respect of statutory charities, the new section 106(1A) makes clear that the section 106(1) power to authorise ex gratia payments is not limited if an Act contains such a general prohibition.

In January 2024, Lord Parkinson of Whitley Bay wrote to the chair of the Charity Commission to note as follows:

The Charities Act 2022 includes provisions, in sections 15 and 16, which would enable charities to authorise smaller ex gratia payments themselves, without the need for Charity Commission approval. These provisions would also enable national museums and galleries, whose governing legislation precludes the restitution of any objects in their collections, to apply to the Charity Commission for permission to make an ex gratia payment involving the restitution of an object. The potential consequences of these provisions were not made clear by the Law Commission when the Bill was introduced, and were not the subject of Parliamentary scrutiny or debate during the passage of the Bill… The policy of HM Government is that national museums and galleries should continue to be bound by their governing legislation, precluding them from resolving to restitute objects from their collections other than in the limited and specific circumstances expressly provided for in legislation. To that end, we will specifically exclude those national museums and galleries from the commencement of sections 15 and 16 of the Act.

The SI as made earlier this month reflects that position – in that it purports to “exclude” from commencement objects in the collections of the statutory national museums.

Why this is a problem

The UK constitution is built on a delicate balance of powers.

The sovereignty of Parliament (which has democratic accountability) means that exercises of delegated or prerogative power are limited – and the law is clear that it is not for ministers to circumvent Parliamentary procedure, and seek to amend the effect of an Act of Parliament by other means.

In this case, the Charities Act 2022 brought this provision in – and designed it clearly and expressly to apply to situations where there was a previous statutory prohibition. The authority delegated to the Secretary of State for Culture, Media and Sport was to decide when to bring the provision in.

The position has been explained in a number of cases from Home Department ex p Fire Brigades Union [1995] 2 AC 513, including in Craig v Advocate General for Scotland, 2018 WL 06536911 (2018):

A commencement provision of the kind under consideration is widely used, and is intended to place a duty on the minister to consider when, not whether, the statutory scheme will be brought into force. Until the power is exercised, or Parliament repeals the legislation, this is a continuing duty to be exercised in good faith. A variety of factors may render it appropriate to delay commencement, including a change of circumstances, such as unforeseen problems or costs. The power cannot be lawfully renounced, nor Parliament’s purpose frustrated by the acts of the executive. If the relevant minister fails in this duty, or abuses his power by acting in a manner inconsistent with it, it is the “paramount duty” of the court to say so (Lord Lloyd of Berwick at 571E-F).

In this case, based on the previous government’s letter to the Charity Commission, it seems that the unusual approach to a commencement regulation stems from nervousness about national museums and galleries using the “ex gratia” powers to apply to the Charity Commission for consent to repatriate objects from their collections. This is different from its approach to non-national museums and galleries. In short, it seems the government may disagree with the effect of the Act of Parliament so is going to render nugatory part of its effect. As such this is a concerning overreach by the executive into the proper remit of Parliament. The proper procedure for amending the Charities Act 2022 is to take a new Bill through the legislative process.