Bill to subject research to 'public benefit' test

July 7, 2006

Industry-funded work is a difficult area under the new Charities Bill, reports Claire Sanders

Academic research faces greater scrutiny under the Charities Bill, which is nearing the end of its tortuous route through Parliament, universities have been warned.

A leading education lawyer said that once the Bill became law, the new public benefit test introduced by the legislation could create a conflict of interest for some researchers.

Sam Macdonald, a partner in the legal firm Farrer and Co, said:

"Universities increasingly carry out commercial research - where the main beneficiary of the research is private business rather than the public - and this could be a breach of charity law. Such projects are therefore likely to be more closely scrutinised."

Universities will still be classified as exempt charities under the Bill, which received its second reading last week and is expected to conclude its committee stage by July 13. As such, they will not have to register with the Charity Commission. But the Bill allows the Secretary of State to designate principal regulators for groups of exempt charities. For universities this will be the Higher Education Funding Council for England.

Mr Macdonald said: "Hefce will certainly have a new role to monitor charity law compliance, and this does raise concerns. To date, Hefce has been a funder and not a regulator."

Andrew Turner, the Shadow Charities Minister, said: "Universities have made very little noise about the fact that under the Bill they will be regulated by the funding council rather than the Charity Commission. The funding council is answerable to the Government, whereas the commission is independent. I am surprised that universities have not made more of a fuss - they could find themselves with an onerous new regulator."

Boris Johnson, Shadow Higher Education Minister, said: "I think we need to keep a beady eye on this one. What we don't want is Hefce using this as an excuse to impose more onerous access requirements or interfere in any other way."

A spokesman for Hefce said: "There will be some additional work developing and agreeing the new systems, but we believe we already do most of what will be required of principal regulators. So we are not expecting a big increase in workload."

Detailed discussions on the necessary secondary legislation to allow Hefce to take on this role will start soon.

A spokesperson for Universities UK said: "Although Hefce does not have a regulatory role, universities already send to Hefce much of the information needed by a charity regulator. Having Hefce as 'principal regulator' would avoid duplication of bureaucracy."

The Bill will affect Oxbridge colleges, which are expected to lose their exempt status. But Mr Macdonald said that colleges would not find it difficult to demonstrate their public benefit.

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