“Proposal For A Regulation On Succession And Wills”
October 21st 2009
The European Union is one of those topics designed to make Liberal Democrats go dreamy, Labour activists lust for extended trade union powers, and Conservative MPs reach for blood pressure tablets. And yet, for good or bad, Europe's interface with our own policy making is far reaching. Indeed, it's a little known fact that the UK Permanent Represenative to the European Commission has a weekly meeting with officials at Number 10 so as to integrate their approaches.
Yet recently, on 14 October, new proposals from the European Commission's Directorate General on Freedom, Security and Justice quietly found their way into the public domain. Expected last March, the now released "Proposal For A Regulation On Succession And Wills" seems innocuous enough. However, on closer inspection
its proposals could have an impact on current social enterprise strategies and especially future Conservative social policy.
It goes like this: UK inheritance law is quite individualistic. It allows a parent to write a will which allocates inheritance funds unequally between children or - more importantly for this column- to invest in a social enterprise or charity by way of a late in life stake, or a legacy post-mortem. Mainland European law though, on the whole, hopes to resist assets only being passed down through male heirs, or ownership concentrating because of socially conservative outlooks on family life or attitudes to land ownership (no matter how socially and ecologically cohesive such traditions may sometimes be). Very often then the laws of mainland European countries require estates to be allocated equally among children, to sometimes by-pass a second or third wife in the family, and to limit allocations to charitable associations.
The new proposals follow this spirit seeking to begin to delineate a common European position on inheritance regarding wills involving assets now in more than one European country. There are 450,000 such cases each year and these would include the thousands in the UK diaspora, with properties abroad, but who have retained links to Britain. The proposal's working assumption is a European Court of Justice ruling that for the purposes of the single market an inheritance is a form of asset flow rather than a relational distribution involving human as well as rational factors.
For UK social enterprises and charities the potential threat is clear: EU nationals working in the City, for example , may make large grants to your organisation only for you to find that another jurisdiction might come looking for a refund in the years afterwards as a time constraint on spending kicks in and assets are recalled to be disbursed to children. Meanwhile, giving by a wealthy benefactor's new wife may be overturned by estranged children from a previous relationship. Most crucially, Britons who have bought houses abroad will have new legal tests placed on their disbursement making it harder to give to the charities they have always loved in the UK.
For political debates the proposals uncover a tension in UK Conservative social policy proposals: The underlying assumption of the mainland European law suggests that parents - no matter how divided - owe a first duty of care to their children in the ultimate disbursal of their assets. By contrast UK law lets those parents chose more easily, for example, between charitable giving and the children , between widows and friends. Now, while Nick Hurd MP who deals with the voluntary sector needs new funds in the third sector of he is to come good as Shadow Minister David Cameron will have to do some fresh thinking about the impact of this new EU proposals on his plans to strengthen families.
After all, the EC implicitly raises a most contentious question: Is a social investor who backs a charity or social enterprise ahead of those for whom s/he has "family duties" really adding any social value at all? Now that really will stop the Lib Dems dreaming, labour lusting - and drive Conservative blood pressure to boiling point once again!
Francis Davis
We will endeavour to update this blog on a weekly basis. Contributers Brian Strevens (Director of the Institute) and Francis Davis (Director of Policy) plan to submit their blogs on alternate weeks.