Cookies on Legislation.gov.uk

The cookies on legislation.gov.uk do two things: they remember any settings you've chosen so you don't have to choose them on every page, and they help us understand how people browse our website, so we can make improvements and fix problems. We need your consent to use some of these cookies.

Search Legislation

Advanced Search

NHS (Charitable Trusts Etc) Act 2016

Contents

Policy background

  1. NHS charities are charities regulated under charity law, but which are also linked to NHS bodies and bound by NHS legislation. They are charitable trusts established under NHS legislation and have as their trustee an NHS body, such as a foundation trust, or trustees appointed by the Secretary of State for an NHS body. The Secretary of State also has statutory powers to transfer trust property NHS charities hold. As such they are distinct from independent charities established solely under charity law.

  1. Funds donated to the NHS must be held separately from exchequer funding provided by the taxpayer. NHS bodies’ statutory remit is derived from NHS legislation, which allows NHS bodies to hold property on trust both for the purposes of their linked NHS body (usually an NHS trust or foundation trust), or for any purposes relating to the health service. NHS bodies which can hold charitable funds are NHS trusts, special health authorities, foundation trusts, clinical commissioning groups, and the NHS Commissioning Board (known informally as NHS England). The default position is that the board of the NHS body acts as corporate trustee of the charitable funds, though those charitable funds may also be held by trustees appointed by the Secretary of State for the NHS body in question.

  1. Since 1973, the Secretary of State has had powers to appoint so-called "special trustees" to manage charitable property on behalf of hospital boards; in 1990 powers for the Secretary of State to appoint trustees in relation to NHS Trusts were enacted, which have since been extended to the other NHS bodies. These powers are now set out in the National Health Service Act 2006 (as amended).

  1. Trustees appointed by the Secretary of State have powers to hold trust property on the same terms as NHS bodies. The Secretary of State has directed the National Health Service Trust Development Authority, a special health authority, to carry out his functions relating to the appointment and removal of trustees, in accordance with orders made by the Secretary of State under the National Health Service Act 2006. Corporate trustees who considered that the appointment of separate trustees might be appropriate, e.g. to separate trustee and exchequer responsibilities, or to harness expertise in administration of charitable funds, could approach the Department of Health to ask the Secretary of State to use his powers to enable the appointment of separate trustees. The Department of Health would consider the business case for doing so, taking account of factors such as the size of the funds involved. As an example, guidance issued by the Department of Health in 2011 said that assets of more than £10 million and annual income/expenditure of £1 million would provide a clear case for appointment of separate trustees.

  1. As at March 2015, there were around 260 NHS charities, with a combined income of £327 million and asset value of £2 billion. The top 30 NHS charities accounted for over two-thirds of total NHS charity income/assets. The vast majority of NHS charities use the corporate trustee model. The Secretary of State has appointed separate trustees to 20 NHS charities, including most of the largest charities.

Reform of NHS Charities

  1. A number of the largest NHS charities called for reform of NHS charities because of concerns that the NHS legislative framework limited the charities’ freedom to grow and develop their charitable activity to best support their beneficiaries. For example, the Secretary of State appointing the trustees made it difficult to demonstrate visible independence from government in the eyes of potential donors. Being bound by NHS legislation prevented the charities adopting different legal forms appropriate to their specific needs, in particular those offering limited liability. The Charity Commission also believed that dual regulation under both NHS and charity legislation made it difficult for NHS charities to achieve and demonstrate independence.

  1. As a result of these concerns, the Department of Health conducted a review of NHS charities in 2011, consulting publicly on its proposals in 2012. In the response to the consultation published in 2014, the department announced the intention to allow NHS charities to move to independent charity status. Charities that decided to become independent would no longer be NHS charities, but independent charities, regulated solely by the Charity Commission, and responsible for appointing their own trustees. The Department of Health put safeguards in place to preserve the unique relationship between the charities and the trusts they are associated with. The funds that are transferred to the new charity can only be used for the same charitable purpose as originally intended; and the NHS body should have some involvement in the new charity’s governance arrangements, for example having a specific place on the board. The Department of Health and the Association for NHS Charities have published detailed guidance for charities on the policy.

  1. The Department of Health stated in its response to the consultation that given this new freedom for NHS charities to become independent, the Secretary of State’s power to appoint trustees was no longer necessary. The Department of Health stated that "where trustees have been appointed by the Secretary of State, the provisions for these appointments will be repealed as soon as possible, and any such arrangements would fall away". The Department of Health has said that it will not compel NHS charities with trustees appointed by the Secretary of State to go through the process of setting up an independent charity, as they have the choice of reverting to the NHS body acting as corporate trustee if they so wish.

  1. The Department of Health stated that it will not appoint trustees to any further NHS bodies that are not already named in the existing trustee appointment orders, but will continue to enable the replacement of trustees for those who currently have Secretary of State appointed trustees, until the trustee appointment powers are repealed.

  1. This Act, therefore, provides for the powers of the Secretary of State to appoint trustees for NHS bodies and to appoint special trustees (in England) to be repealed , and makes related and consequential provision.

Great Ormond Street Hospital Children’s Charity

  1. JM Barrie’s gift of the rights to "Peter Pan" in 1929 has provided a significant source of income to Great Ormond Street Hospital Children’s Charity. The copyright first expired in the UK and the rest of Europe in 1987, 50 years after the death of JM Barrie. However, Lord Callaghan successfully proposed an amendment to the Copyright, Designs and Patents Act 1988, giving Great Ormond Street Hospital Children’s Charity the unique right to royalties from publications and performances of "Peter Pan" in perpetuity.

  1. Great Ormond Street Hospital Children’s Charity wished to take advantage of the new policy on independence for NHS charities, but had difficulty in doing so, because the Copyright, Designs and Patents Act 1988 specifies that the "Peter Pan rights" are vested in special trustees appointed under NHS legislation for Great Ormond Street Hospital. The Department of Health made an agreement with Great Ormond Street Hospital whereby the existing NHS charity transferred most of its undertaking by assignment to an independent charitable company limited by guarantee. The Department of Health also appointed that new charitable company as corporate special trustee of the existing NHS charity under section 212 of the National Health Service Act 2006 in respect of the "Peter Pan rights".

  1. At present the Great Ormond Street Hospital Children’s Charity is unable to fully complete the conversion to an independent charity, as the NHS charity has to be kept in existence until the Copyright, Design and Patents Act 1988 is amended, to avoid its statutory rights being lost. According to the Charity, this causes a number of complications, including the risk that legacies to the charity may fail, as a result of which significant charitable donations could be lost to the NHS provision of healthcare at Great Ormond Street Hospital. In addition because the charity is operating two charities side-by-side, it has a duplication of governance arrangements, separate accounts and may need to submit duplicate returns to the Charity Commission.

Back to top