(2 years, 9 months ago)
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The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)
My Lords, this Bill improves the efficiency of the charity sector by implementing the majority of the recommendations from the Law Commission’s Technical Issues in Charity Law report. The Bill simplifies a number of processes, promotes consistency and reduces overcomplicated regulation. Rather than be burdened by overly bureaucratic processes, charities will be able to focus their resources on the public good. The Law Commission and the Charity Commission are in full support of the Bill and it has been welcomed by the sector.
During the pandemic, the charity sector has received several billion pounds of support from the Government, including a £750 million package of support for charities, social enterprises and the voluntary sector, as well as benefiting from the cross-economy measures that the Government have introduced. We are deeply grateful to the thousands of charities and social enterprises, large and small, that have provided practical and emotional support to people in every corner of this country. It is now time for us to address regulatory change that will continue to make a difference to charities in the longer term.
In 2017, the Law Commission published its Technical Issues in Charity Law report, taking inspiration from the review of the Charities Act in 2012 produced by my noble friend Lord Hodgson of Astley Abbotts, and after extensive consultation with the charity sector and charity law stakeholders. The Law Commission gained valuable insights from an array of consultation events and meetings involving representatives from across the sector. This close engagement has led to various iterations of the proposals, and the Bill reflects this extensive input and scrutiny.
This is a highly technical Bill. However, the changes that it brings will, together, give charities more flexibility, time and resources to fulfil their charitable purposes. While we must ensure that the appropriate safeguards are in place to protect the public’s trust in the sector, we also have a duty to shape legislation to work for those delivering such vital services, helping those in need and working to improve lives. I believe that the Bill strikes a sensible balance between protecting charities’ assets and avoiding unnecessary expense and bureaucracy. The Bill makes a number of amendments to the Charities Act 2011. I will now explain the changes that the Bill will bring, grouping the clauses into themes for clarity.
Clauses 1 to 5 of the Bill will simplify current processes for amending governing documents and provide greater flexibility. The Bill will align these amendment mechanisms as much as possible across the different legal forms that charities can take.
Clauses 6 and 7 make it easier to use funds from a failed fundraising appeal for other similar purposes, alleviating the need for charities to expend time and resources to search for donors of small donations.
Clauses 9 to 14 concern the use of permanent endowment. The Bill will open up more opportunities for trustees to exercise flexibility in making decisions that are in the best interests of their charity, allowing them to utilise their permanent endowment better and make social investments, while protecting the enduring nature of such funds. The Bill creates a clearer definition of permanent endowment and a new power for trustees to borrow from their permanent endowment, and it streamlines the existing power available to trustees to release those funds.
Clauses 15 and 16 concern ex gratia payments, which are payments that trustees want to make morally but cannot make legally. The Bill allows charities to make relatively small payments without seeking Charity Commission authorisation. It also reframes the test so that trustees, if they want to, can delegate the decision to make these payments to the charity’s staff.
Concerning land transactions, Clauses 17 to 24 will remove ineffective and disproportionate statutory requirements around disposals of land by charities, create a simple process for ensuring compliance with statutory requirements and pave the way for secondary legislation to broaden the pool of advisers at trustees’ disposal.
Regarding inappropriate charity names, Clauses 25 to 28 expand the Charity Commission’s powers in respect of misleading, offensive or very similar charity names to remove anomalies and prevent an inappropriate name appearing on the register of charities.
Charities could not function without the vital role of trustees. In Clauses 29 to 31, the Bill allows charities to source goods from trustees, subject to safeguards, removing a gap in the current law. It also enables the Charity Commission, in limited circumstances, to authorise trustees to be paid for specific work that they have carried out for the benefit of the charity.
In relation to incorporations and mergers, Clauses 32 to 35 save administrative costs by ensuring that legacies in wills can be transferred to a merged charity and by automatically giving trust corporation status to corporate charities in their capacity as trustees of charitable trusts.
On charity tribunal costs, Clause 36 provides protection for trustees to avoid charities being discouraged from pursuing litigation because of the risk of having to pay the costs of proceedings personally.
The Bill contains further provisions to modernise language and to rationalise the Charities Act 2011.
All benefits I have described have been carefully balanced against the need for proportionate regulatory safeguards. We have worked closely with the Charity Commission, which will benefit from the removal and reform of unnecessarily lengthy or complex processes.
Although not a provision in the Bill, the Law Commission’s 2017 report recommended that the Government periodically review all financial thresholds in the Charities Act 2011 with a view to increasing them, by secondary legislation, in line with inflation. The Government have accepted this recommendation and agree that such a review should take place at least every 10 years and, subject to resources, we will aim to undertake a review of the financial thresholds in 2022. I can confirm that thresholds in relation to permanent endowment and failed fundraising appeals will be included in the review.
The Bill will have a positive impact on all charities, large and small, with the greatest benefits felt by small charities, for which administrative burdens and legal and professional costs are likely to be most prohibitive and disproportionate. Other than financial savings, clarity in the law will help trustees to act with confidence in their charity’s interests. Removing unnecessary layers of regulation and administrative burdens enables charities to function more effectively. In turn, we anticipate public trust to flow from charities working unhindered and able to focus fully on their charitable mission.
In closing, the Bill plays a key role in our efforts to support the charity sector. Through the valuable work of the Law Commission, those who work in charity law every day have shone a spotlight on the particular processes that drain their resources away and distract from their charitable purposes. In providing clarity and consistency in the legal framework, charities can be confident that we are here to make their paths clearer and simpler. We continue to be immensely grateful for all their work.
I hope that the Bill receives strong support from your Lordships, and I look forward to your contributions in this debate. I beg to move.
Baroness Goudie (Lab) [V]
My Lords, I declare my interests as in the register, as a trustee of a number of charities and as an ambassador.
I welcome this Charities Bill, which was announced in the Queen’s Speech on 11 May, and these important changes to charity law. I am pleased that the Charity Commission has been working with the Law Commission and the Department for Digital, Culture, Media and Sport. These consultations have been going on for a number of years, and I now have the pleasure of seeing that they will be enacted. I am also pleased that the Labour Party supports this Bill.
Charities will be able to have access to a wider group of professional advisers on land disposal. We know that many charities are left properties and land by beneficiaries who want to help them, as they are personal charities in many ways. Also, many charities have properties as investments. As a patron of the Community Foundation for Northern Ireland, I know that we were lucky to have been able to sell two large offices at a time when the charity needed investment to buy a better office and work with more staff. In difficult times, it is often necessary to sell.
I am pleased about the flexibility around charity endowments. Endowments are an excellent form of good housekeeping. In the long term, as we come out of Covid, we will have a great opportunity to encourage smaller charities to allow endowments. We have seen how this has helped some charities that have had difficulties during and prior to Covid because of difficulties in themselves. Trustees will be able to borrow up to 25% of their present endowments, but I want to be assured that there will be a way of monitoring this and ensuring that the borrowing does not endanger them. I know that trustees would not wish to do that, but outside advisers should ensure that charities and their staff are not endangered by this.
On the question of appeals, I have been involved in cases where charities have had great appeals but the companies that charities use to assist them in their appeal are not always transparent. As the Bill proceeds, I would like to see us put in a few more clauses to protect charities from these companies and show how we will be more transparent, because the companies that assist charities always get paid. I hope that charities will have full disclosure when using these companies, because sometimes the amount that they take is more than the charities are able to raise. This is a really important issue for us and for the Government, as well as to protect trustees and staff.
Charities should also be responsible for declaring what funds are used for and whether any funds are over or cannot be used for what they were raised for. This is a really important issue that should be on charities’ websites. It is also important that charities have websites—they know that they have to—with all their funding, staff, et cetera.
The Minister knows that I have a view about the future of charity boards, as we discussed at one point during an Oral Question. I hope that, not through this Bill but through other legislation, we will look at corporate governance as we come out of Covid for charity trustees and how that should operate along the lines of company boards et cetera.
Baroness Prashar (CB) [V]
My Lords, I refer to my interests as in the register. I welcome these measures to make charity regulation more effective. As a nation, we owe our charity sector a legal framework that is clear and unambiguous. These measures will make it easier for charities to navigate the law and carry out their functions effectively while retaining important safeguards.
I welcome the introduction of greater flexibility with regard to fundraising appeals. Ensuring that donations go towards the purpose intended, or as close as possible, is important, as is the trust between the donor and the charity. This change strikes the right balance. However, it would be helpful to monitor the use of this power with a view to raising the limits in the Bill.
Several changes to provide additional clarity around permanent endowments and the extension of the toolbox available to trustees in seeking to further their charitable purposes are helpful, too. Powers relating to the appointment of trustees, payment of trustees, clarity regarding transfer of gifts following a merger, and making it easier for charities to amend governing documents to dispose of land efficiently are all very sensible.
Good governance of charities is crucial both for accountable stewardship of resources and for retention of public confidence. It will, therefore, be important to ensure that the Charity Commission, as a regulator, is properly resourced and has the capacity to help implement these changes and, where necessary, to keep the changes under review.
Charities are facing difficult times dealing with the recovery from the pandemic. Some 85% of charities expect to be delivering services at pre-pandemic levels this year, but fewer than half expect a return to pre-Covid fundraising levels. If it is the Government’s role to unlock the potential within civil society, we need much greater and stronger leadership from government to support civil society to develop capacity, capability and resilience.
While these changes are really very welcome, it would be helpful to know what steps the Government will take to grow the levels of giving and philanthropy in this country. Increased giving can help charities adapt to changing circumstances brought about by the pandemic, but giving will not grow spontaneously. To build on the necessary changes in this Bill, the Government need to find ways to mobilise greater giving. It would be helpful if the Minister could take forward the need to increase giving and say what steps are being taken to increase giving along with these changes.
Lord Hodgson of Astley Abbotts (Con)
My Lords, my noble friend the Minister was kind enough to refer to the official review of the 2006 Act that I carried out now nearly 10 years ago. I take a certain paternal pride that a large number of the recommendations that I made in that report have survived and appear in the legislation before us this afternoon, but it would be quite wrong for me to say that a report that took more than a year to produce and ran to 150 or 160 pages could be produced by one person. I should begin, therefore, by placing on record my thanks to the team—then at the Cabinet Office, now at the DCMS—led by Ben Harrison, which provided such wonderful advice and support. I would also like to thank more broadly the Law Commission, whose work I think is often undervalued in your Lordships’ House, for the way in which it has picked up and improved many of the suggestions that I made. The Bill has my 100% support except in one serious matter, of which I have given prior notice to my noble friend and which I will return to in a minute.
The underlying principles for my review could be seen as follows. The charities sector has very deep roots—witness the fact that the first recorded charity, the King’s School, Canterbury, was started in 597—and therefore it reflects the very rich and diverse social life of our country built up over hundreds of years. One consequence of that is that it is not neat, and there are those who would like it to be neat. They would say, “Why don’t we just have one cancer research charity so that we can avoid duplication and waste of money?” I certainly resisted that, and I am glad that the Government have, because to do that would drive a stake through the heart of a lot of the voluntary endeavour from which our society benefits. But a consequence is that a lot of charities are pretty small. We need as simple and clear a regulatory system as possible so that charities do not have to go to lawyers and spend a lot on fees to understand what they can and cannot do. I hope that, when the Bill passes, my noble friend’s department will urge the Charity Commission to bring forward user-friendly, understandable advice about the brave new world that we will enter.
Thirdly and finally, as background, I argue strongly that whenever in the past people gave money to charities they did so to put it to work; they did not want it stuck in a bank account on some technicality. We have to find ways to make sure that the structure remains up-to-date with modern conditions.
Against that background, what are my top picks from the Bill? First, as my noble friend said, there is the commitment to a quinquennial review of financial thresholds, without which they will rapidly become of little value with inflation, and in particular applying them to the permanent endowment figures of £25,000.
Hurrah for the simplification of the procedures for selling land. I was quite astonished to find that a charity selling land is bound by all sorts of procedures, but a charity buying land, which by definition must be just about as dangerous, had almost no procedures and prohibitions at all.
Hurrah for relaxing the rules on permanent endowment so that more money can be put to work, for the reasons that I have explained.
Hurrah for simplifying the merger regime, in particular the rules that my noble friend mentioned around bequests. It was astonishing how many charities that had merged still had to be kept in existence because they still anticipated some future bequests and legacies.
Hurrah for the changes to the rules regarding failed, or indeed overly successful, appeals, with charities spending a long time trying to find people who had donated money because the appeal had got either too much or not enough money. That was a complete waste of time. People almost certainly did not want the money back. There are limits in the Bill, and I am sure that is right.
Finally, hurrah for some loosening of the way that trustees can be reimbursed for their real efforts.
Those are my top picks, but they take me to my really serious concern about the Bill. I imagine that most Members will think of the Charity Commission as the all-powerful regulator of its sector. I certainly did before I began my review. In fact, it is not. Its ultimate power is subject to the permissions of the Attorney-General. Under Section 325 of the Charities Act 2011, if the Charity Commission faces
“A question which … involves … the operation of charity law in any respect”,
it can appeal to the Charity Appeal Tribunal for a ruling
“only with the consent of the Attorney General.”
This is, I submit, an extraordinary position for the sector regulator to find itself in. It is as though one of the financial regulators, seeking a ruling on a point of law, had first to go to the Treasury to get the go-ahead. People would think that an extraordinary restriction on a regulator’s independence and power, and so it is.
I recommended that the commission should be free to appeal to the tribunal but that it should have to inform the Attorney-General of the action that it was taking. The Law Commission supported that proposal. The Government have turned it down. Therefore, the Bill as drafted means that the Charity Commission remains in the last resort under the sway of the Attorney-General.
However, this in-principle defect is made worse—far worse—by the real-life performance of the Attorney-General’s duties. I refer to the case of the Royal Albert Hall, which is a Victorian charity built in the 1880s by public subscription. It is one of London’s great cultural venues, being home to the Proms and so on. As part of the original financing, subscribers were offered seats in the hall in perpetuity. The original idea was that, on the nights that the holders did not wish to attend, they could sell their seats to the Royal Albert Hall box office for face value, less a 10% handling charge.
A few years ago, seat-holders decided that they could sell their seats much more profitably through a third-party website, so today seat-holder tickets for an Eric Clapton concert next year, with a face value of £175, are on sale through viagogo at £946—a short £800 uplift or, in the words of a television sitcom, a nice little earner. It will come as no surprise that, pre pandemic, seats were allegedly earning £10,000 to £20,000 per annum and are changing hands for more than £150,000 each. As I said before, the Royal Albert Hall is a charity and, as such, has a board of trustees. There are 24 of them, but 19 are seat-holders—80% of them. I have no objection to seat-holders seeking to enjoy their private property; that is one of the provisions of the European Convention on Human Rights. But when a seat-holder becomes a trustee, a conflict of interest must surely arise.
It was on this point of a conflict of interest that the Charity Commission sought a legal ruling for which, under the present law, it had to obtain the Attorney-General’s permission. The original application to the Attorney-General was made—wait for it—in August 2017. Four years later, we are still waiting for a decision from the Attorney-General as to what the Charity Commission can and cannot do.
In the meantime, I understand that the commission has tried to engage the trustees of the hall and suggested that, if a majority of the trustees were not seat-holders—for example, 13 out of 24—that would be a satisfactory compromise. The trustees rejected this proposal and, in a letter dated 27 April this year, the chairman of the RAH Seatholders Association described the purpose of that association, which was set up only last year, as being “to protect members’ interests from the very real threat posed by the Charity Commission”. These are strange words to use about your sector regulator.
To conclude, I stick to the proposal made in my report and supported by the Law Commission that the Charity Commission should be free to approach the tribunal for rulings on a point of law, but that the commission should be required to tell the Attorney-General that it was so doing. This is otherwise an excellent Bill, which has my enthusiastic support, but in my view we need to discuss and amend Section 325.
Baroness Greengross (CB) [V]
My Lords, I declare my interests as in the register. I welcome the changes proposed in this Bill, based on the Law Commission recommendations from 2017. I also pay tribute to the noble Lord, Lord Hodgson of Astley Abbotts, for the statutory review of the Charities Act that he carried out in 2012, and for the very relevant points that he has just raised with the Committee.
As someone who has had a leadership role in charities for many years, I know all too well how much of a burden the legal restrictions are for those trying to manage these organisations. While I welcome the proposed changes in the Bill, I do so with some words of caution as to why we must continue to have a strong legal framework governing how charities operate.
In particular, I wish to draw attention to the extension of cy-près whereby the wishes of a donor to charity can be carried out even if the original purpose of the gift has failed. The Bill proposes to extend these cy-près powers to include donations of £120 or less, or where a trustee resolution has agreed to use the funds for a different charitable purpose. In most cases, the charities would use this money sensibly and for a charitable purpose as close as possible to the original, but experience has sadly taught me that there will be times when this will not be the case. Unfortunately, it is often with small transactions or donations that fraud can occur.
For many years, I was director-general of Age Concern England. Age Concern was not, and is not, one organisation; it is a federation of local Age Concern organisations, most of which operate professionally and play an important role supporting older people in their communities. Every so often, though, in my experience, there would be a rogue element somewhere—in the federation, these things happen. On one occasion, for example, someone involved with an Age Concern local charity had managed to manipulate their partner and unbeknown to them had stolen money from the local charity to build themselves a house with a lot of land. That person was caught and ended up receiving a long prison sentence. As chief executive, I had to travel out of London to where this local charity was based to convince the local police not to publicise the case to the national press. Fortunately, they agreed, for if they had not, the reputation of the national federation would have been undermined by the actions of an individual operating in a local charity.
These stories are fortunately rare, and in this case the person responsible was caught and the money was recovered, but it illustrates why we need strong legal frameworks regulating how charities operate. While having to comply with the Charities Act is often cumbersome and time-consuming, having these sorts of rules governing charities reduces the risk of this type of fraud, so while I support the Bill and the changes it recommends, I do so with the warning that legislation and safeguards about the way that charities are run are often strict for good reason. We lose them at our peril.
Baroness Rawlings (Con)
My Lords, the London County Council’s children’s care committee was not a charity, but all of us were unpaid. Admittedly, that was a long time ago, and it was my first job. I trained subsequently as a VAD nurse and worked with the Red Cross for many years. Of the money raised, 7% was spent on administration—only 7% was allowed in those days. Today’s figures used to be available on the Charity Commission’s website, but they have been dropped. There are substantial amounts being mentioned. The NCVO is the most helpful source of information, if one need to find out more.
I fully support the fact that anyone who does a proper job and works hard should be paid a proper wage. There are more financial responsibilities nowadays; life’s demands are far tougher in today’s market than they were 50 or 60 years ago, and the competition in the market for all levels of work is greater. A few years ago, I asked the CEO of a major charity why he moved from being CEO of charity X to being CEO of charity Y. The answer was simple: “Because they paid more.” I was shocked and saddened. I am not—I repeat, not—including trusts and educational institutions such as the Wellcome Trust or research bodies with investments. That is a totally different story.
Today’s list of charities is so huge and varied and the legal position so diverse and complex, especially in the area of percentage deductions, that perhaps charity law should be revisited further than this Bill. I know that, 50 or 60 years ago, we were a very different country. With the example we have had already from my noble friend Lord Hodgson regarding the Albert Hall trustees, I wonder where it all went wrong.
However, many—indeed most—of the charities in the voluntary sector are staffed by volunteers, who do a job of some sort for no financial gain. I am not seeking to make some kind of moral judgment but simply to draw the distinction. Volunteers are not better than paid workers; indeed, they may be one and the same, in that they have paid jobs but also do voluntary work in their spare time. This is quite normal in Britain and other western democracies.
Nearly half of the British adult population are volunteers—roughly 48%, or 22 million people. Let me give your Lordships a few examples: helpers in health centres; recently retired doctors, some spending up to eight hours a day giving Covid jabs; fundraisers; lifeboat crews; local government councillors; judges; members of non-stipendiary magistrates’ courts; church wardens; choirs; bell-ringers in parish churches; Samaritans; prison and hospital visitors; and chancellors of universities. The list is endless. They are people who wish to help others less fortunate than themselves. They wish to do their civic duty. They care.
Alongside those 22 million volunteers, many of your Lordships have worked for various charities all your lives. I admit that I was lucky enough to be in a position to do so too. Like my noble friend Lord Hodgson, whose review I very much recommend, I was president of the National Council for Voluntary Organisations—a fine organisation. But what do the NCVO, the Charity Commission and all those generous people who donate their money have to say regarding the alleged percentage that some charities pilfer yearly from the kitty?
I repeat my question: why do so many so-called charities need to spend this X per cent? It is no doubt more than the 7% that I mentioned earlier. This hard-raised money is possibly being spent on overheads and administration, rent, organising events and salaries. The figures should be transparent and easy to access and check. We all know why they are not, as it is much easier to spend somebody else’s money. I fully support the cy-près powers suggested in the Bill and the Bill itself.
I urge the Minister to find a way, in the Special Public Bill Committee, that my argument and its spirit be included in this Charities Bill.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, I refer to my charitable interests as outlined in the register, and I would also like to share with the Committee that I have worked with charities for most of my life and have some experience of large ones and some smaller ones. This has informed what I want to say today. I am grateful for the briefings we received, the Library produced a very good note and the NCVO and other organisations pulled together some helpful thoughts.
The Minister said that the Bill is seeking to make a series of changes that will make it easier for charities to navigate the law and carry out their functions effectively while retaining important safeguards. We broadly support what she says on this. The Bill does achieve that, although it has taken a long time to reach the point where we can see it turning into law. I hope that making it easier for charities to amend their governing documents, dispose of land and use their resources more effectively will be a useful change to the work that goes on, day in, day out, across the country in all our various wonderful charities.
However—I think I picked this up from contributions already made—I wonder whether the Bill goes far enough. In some senses, we seem to have the worst of both worlds. We have a relatively weak regulator, which is heavily burdened and not well resourced to do the sort of job it has. It has had, it could be said, a pretty poor reputation in recent years, although it has improved. The Bill is a missed opportunity to rectify some of those issues, but it is wrong to try to change too much in this Bill—we probably do have to wait for another opportunity—but I think we will regret that. The noble Lord, Lord Hodgson, and others have pointed out some of the issues that still need to be addressed.
I have only a few small points to make about the detail, but I think they will be picked up in Committee. I am a bit surprised that we still have a number of different modes of operating charities. This raises issues in itself, although there are one or two that catch the eye more than others. I am referring here to royal chartered bodies, which are also charities. There is a case for considerable overregulation, and it is no longer the case that royal charters are providing the sort of support and ring-fencing they perhaps would have done before. The classic is the BBC, with its royal charter and charitable functions underlying all it does, yet it is subject to regular approaches by Governments of all parties, but primarily Conservative Governments, and does not seem to get the protection that its charitable status might once have suggested. There is nothing in this Bill that would allow us to look at that, but it needs to be picked up at some point as we go forward.
The second point is on fundraising: the Bill does a good job in introducing greater flexibility for charities with regard to fundraising appeals, the way the Bill sets out what happens if a fundraising appeal is either too successful or too unsuccessful will help move forward and cy-près has already been mentioned by a number of speakers. However, the supporting documentation states that there is a need to monitor the process going on here, and we may have worries about how this is going to operate in practice. I could not see how that was going to be done in practice. I wonder whether when she responds the Minister could mention that and explain what is intended.
Enough has been said on permanent endowments; I do not need to go into that. The power to use permanent endowments to make social investments is a really important change in the way we are going forward, and others have mentioned that as well. The new power moves a long way towards where most charities would want to be, which is not being tied to the value-for-money constraints that have so often bedevilled what they have wanted to do, but it does not go far beyond where they might want to get to. It does not go further down that line, in the sense that it does not raise too many dangers. Monitoring will be important here, and, again, it would be useful if the Minister could respond on that point.
I have a very minor point on ex gratia payments: when I read the Bill the first time, I was a little struck by what exactly is going on here, and I still do not quite understand the argument that says this allows charities to honour moral obligations. I do not think moral obligations feature in much of the law of the land. Morally, we are probably wanting to do lots of things, but we are restrained by the law of the land and other conventions. Again, when she comes to respond, could the Minister explain where this fits into the great scheme of things, perhaps giving us some examples of where moral payments might be a useful addition to the range of things for which trustees have responsibility? I am not against it in principle; I am just a bit confused about where it will take us in the great scheme of things.
On the payment of trustees, if I recall correctly, the original report by the noble Lord, Lord Hodgson, called for quite a radical change here: that the professionalism that could come from paying trustees should be considered. It is not in this Bill, and indeed was not accepted by the Government, but it is an important issue and should not go away. Payment for goods provided by trustees to their charities, where that is properly protected, above board and perfectly transparent, must be perfectly acceptable. There is a broader question about whether or at what point we should professionalise trustees and their role, particularly in the bigger charities. A charity with which I am involved is based in America and regulated under its rules, and there it is perfectly normal for trustees of charities to be paid and, indeed, for the chief executive of the charity also to be a trustee. It is a bit of a shock if you come from the British system and work on the American system. I am not saying that I necessarily think it is the right thing for all charities, but if it works well in one country—one territory—and serves the purposes of what they achieve by charitable objectives, it may be worth looking at.
Finally, on the issues that were rejected by the Government, even though they were accepted by the Law Commission, the noble Lord, Lord Hodgson, has made a good case about seeking the permission of the Attorney-General. I look forward to seeing that when we come to Committee and to supporting him if he chooses to table an amendment in the way he has suggested.
Lord Naseby (Con)
My Lords, I, too, pay tribute to my colleague and noble friend Lord Hodgson for a tremendous amount of work done in probably one of the key areas of our national life. I declare an interest: currently I am a trustee of the Northamptonshire Victoria County History Trust. I am also involved in a whole host of charities in Bedfordshire, where I live, including the Bedford School Foundation—which I founded—and I help a number of trusts in Northamptonshire, where I represented Northampton South for 23 years.
This Bill is really welcome, and I congratulate Her Majesty’s Government. It has been a long time coming. Two Governments did nothing about it, and thankfully the present Government have got a grip of it and decided to move forward. I congratulate my noble friend on the Front Bench on having the privilege of steering it through and the Prime Minister on making sure that the Bill is on the statute book in due course.
Although one welcomes the vast majority of the work that has been done and the proposals, inevitably one looks at the elements that were not accepted by the Government. There is one element that sort of straddles, and that is land. I am a loyal user of my local Church of England church, where my wife was the secretary until very recently. I absolutely agree that Her Majesty’s Government are right to remove the proposal that there should be a requirement for charities not to advertise disposals of designated land. However, I am still marginally confused. I apologise for that, but when one is active in a parish one is very conscious that there are bits of church land that are a bit of a holding, and it is not necessarily easy to remove just a section, particularly on burial grounds. You will quite often find that there is an old burial ground and different bits of land belonging to other owners, which are already agreed in principle to be an extension of a burial ground. I just raise that issue, because I think it is important.
On Clause 12 on borrowing from the permanent endowment, I understand why charities have to borrow. It is not a good thing on the whole but, if they have to borrow, I understand why. I was chairman of a friendly society, and from memory it had a very strict rule on the percentage of borrowing. It was not left the least bit vague, and I suggest to Her Majesty’s Government that it should be quite clear, in black and white, what the percentage is and not as a general rule.
On the charity tribunal rejection, we can perhaps look at this again in Committee, but Recommendation 40 of the Law Commission review argued that it should be possible for authorisation for charity proceedings under Section 115 of the Charities Act 2011 to be sought from the court or the Charity Commission where the commission had an apparent or actual conflict of interest.
As far as I understand it, the whole of the charitable movement is supportive of the Law Commission’s suggestion because it would provide reassurance for those seeking authorisation and ensure that the Charity Commission is not suspected of using authorisation for reasons not to do with the merits of the proceedings. We only have to look at what is happening in society at the moment with statues being thrown into the Bristol docks, and others being pushed over and destroyed, to see that life in our world is changing and that somebody—it may well be the Charity Commission—needs to get a grip of those elements.
I raise one specific issue; it is much more relevant for Committee than here. I have been approached by the Spilsby Grammar School Foundation on its attempt to update its constitution. It is not appropriate to go into it in detail now but I hope that my noble friend on the Front Bench will accept some representations from the trustees and their lawyers, Sills & Betteridge, rather than me going into detail now.
I conclude by reflecting for a second—as this is a Second Reading—that gift aid, which is the foundation of much of the money that comes in to our charities, was introduced by John Major on 1 October 1990. Today, it is the world’s greatest charitable tax relief scheme. That is a major achievement for any society. It is worth well over £1 billion in tax relief and represents around 6% to 7% of voluntary income. I also pay tribute to Gordon Brown. He extended gift aid so that smaller donations would be eligible. That in itself is a great tribute.
I have just a final thought. I received in my email this morning a briefing on the social care Bill. I declare an interest as I am married to a doctor and we talked today over breakfast about whether there is a possible opportunity in that area in life to produce the equivalent of the gift aid scheme for social care. I am a marketing man and discussed this only briefly over breakfast so I have done no real deep thinking on it, but I am putting down a marker: I think there is an opportunity there.
Baroness Hayman (CB)
My Lords, I declare my interests as a co-chair of Peers for the Planet and the chair of Malaria No More UK. Like others who have spoken, I have been involved with various charities for many decades.
I certainly support and welcome this Bill and its provisions to address complicated and uncertain areas of charity law. I will leave it to others better qualified than I to comment on some of the detail, although I have past experience of legacies and ex gratia payments where these provisions will, I think, be extremely welcome.
Since we do not often debate charity law, I hope that noble Lords will allow me the opportunity to touch responsible investment, which is another area of charity law that could similarly be described as complicated and uncertain, and, in line with that, to consider how the role and remit of the Charity Commission aligns with the UK’s net-zero and biodiversity goals.
In January 2020, the Charity Commission began a listening exercise. It revealed that ambiguities in charities investment law impede some charity trustees from pursuing responsible investment strategies. The commission subsequently published a consultation on draft revised responsible investment guidance. My reading is that this continues to take a permissive approach to responsible investment but neither expects nor encourages any charity to invest responsibly. I fear that that could be interpreted as an invitation not even to consider whether responsible investment is the right thing to do.
With environmental degradation and climate action failure commonly recognised as the greatest risks we face, and with the Government arguing that all sections of society should be involved in our statutory and international obligations and support the UK’s transition to a net-zero, nature-positive economy, I have to ask whether the Charity Commission should play a part in this and encourage charities to do so themselves. The commission’s statutory remit does not include any express mention of sustainability or any requirement to promote sustainable behaviour on the part of charities. This is at odds with government policy and trends in all areas of society. The commission’s strategy documents —its five-year strategic plan and its business plan—make no reference to the challenges posed by climate change and biodiversity loss. The commission last updated its rather slim guidance on environmental sustainability in March 2013.
The Climate Change Committee’s recent progress report to Parliament emphasises the need for a net-zero test to ensure that all government policy is joined up and compatible with UK climate targets. Charities and their regulator should not be exempt from this. At a time when these changes are driving comprehensive social, economic and political change, charities should be at the forefront of responding to it and seizing sustainable opportunities, and the Charity Commission should be encouraging them to do so.
I agree with the noble Lord, Lord Stevenson, that this is not the Bill to make major changes to the commission’s functions, although perhaps in future we could look at how we could insert a responsibility for it to align with climate change goals in statute. In the meantime, much could be done through improved guidance and clarification of the commission’s role to ensure that it takes the UK’s environmental commitments into account when setting its strategy. I would be very grateful for any comments from the Minister on how the Government consider their own goals should interact with the Charity Commission’s remit, powers and guidance for charities.
Viscount Chandos (Lab)
My Lords, I thank the Minister for her very clear introduction to the Second Reading of the Charities Bill. She has exceptional commitment to and experience of the charitable sector, which informed her remarks and reinforced the authority with which she spoke.
I welcome this Law Commission Bill, even though its status limits the extent to which there can be any amendments even to the technical and tidying-up objectives the Minister summarised. Other noble Lords have already covered many of the Bill’s key issues so I propose to focus on one specific and perhaps rather narrow area relating to permanent endowments. Therefore, in drawing the Committee’s attention to my charitable entries in the register of interests, I should disclose that three of the charities of which I am a trustee have endowments, but in all cases these are expendable rather than permanent.
Before I address my specific point on permanent endowments and social investment, I pay tribute to the extraordinary work done by charities across the whole range of everyday life in our society. But, as Bill Gates, for all the financial muscle of the Bill and Melinda Gates Foundation, has regularly emphasised, philanthropy cannot and should not be seen as a substitute for proper governmental funding of public services and international aid. Unfortunately, the economic policies of the Conservative or Conservative-led Governments since 2010 have led to devastating cuts to public service budgets in so many areas, notably that of local authorities. That has forced many charities and funders to replace statutorily provided or funded services. The Government’s levelling-up rhetoric might suggest that this will be reversed, but any detailed examination of the spending assumptions for non-protected departments in the most recent Budget would dispel that optimism. None the less, I hope that in time these cuts will be reversed and philanthropy can return to a greater extent to its correct role of innovation.
Clause 13 gives trustees the power to make social investments out of a permanent endowment as long as the charity has opted into the total return investment approach. Under current legislation, social investment is made with a view to directly furthering the charity’s purposes and achieving a financial return for the charity. It is acknowledged that these investments are likely to deliver sub-market returns, including the possibility of the loss of all or a significant portion of the capital invested.
The example given in paragraph 94 of the Explanatory Notes envisages a charity with a permanent endowment committing half its funds to a single social investment in the hope or expectation that the other half of its assets would deliver sufficient return to protect the long-term value of the endowment. Maybe, but the concentration of risk in one social investment means that a perfectly realistic scenario could be the total loss of that investment, which would be highly unlikely to be compensated for by any normal level of return from a diversified portfolio of mainstream financial investments. The Esmée Fairbairn Foundation, of which I am a trustee and past chair, has been making social investments for 20 years and has suffered a number of partial and total losses on them, but that has been from about 150 different social investments with a maximum exposure of no more than a few per cent of the total value of the endowment.
I understand from the Minister that it is intended that regulations to be made by the Charity Commission in respect of this issue will have specific requirements on trustees to balance the risk and returns on a portfolio of social investments with those on a portfolio of financial investments. Will they include limits on the concentration of risk through diversification among social investments as would apply to a prudently managed portfolio of financial investments?
There is a story, probably apocryphal, of a Boston heiress arrested for an offence which she acknowledged brought shame on her prominent family, who pleaded, “But I thought it was better than dipping into capital.” Unlike her, I do not make a fetish of the preservation of capital, and I applaud major trusts and foundations, such as Gatsby, Monument Trust and the Atlantic Philanthropies, which have adopted spend-down policies, but perpetual endowments derive from the wishes of the philanthropist and settlor to enable a trust or a foundation to do its work in perpetuity, and we owe it to those philanthropists to ensure as far as possible that that is the case.
I am a bit puzzled by why this has been included. I believe that trusts and foundations predominantly have expendable endowments. Social investments can do interesting and innovative work, but they are still only a sideline and, in my view, will remain a sideline to the core activity of grant-making foundations of making grants. Will the Minister say what representations have been made on this? Did they come from trusts and foundations that have perpetual endowments, or from sponsors and promoters of social investments who may have been seeking to broaden the universe of potential investors?
The Minister said in her opening remarks that the Bill was intended to reduce overly bureaucratic processes. Investing endowments have become ever more complicated, not least because of the concerns about responsible or sustainable investing, which the noble Baroness, Lady Hayman, referred to. I am afraid I disagree respectfully with her about what I hope will come out of the Charity Commission consultation. A permissive and clarificatory outcome would be helpful, but a prescriptive one would be unhelpful.
For that reason, I deplore the legal action being taken by a number of trusts and foundations to try to make it legally required for trusts and foundations to invest in line with their mission. It should be left to the trustees of each of those foundations to judge the extremely complex issues around that. One trust or foundation may have a single focus or objective, say in the area of climate change. It is relatively possible to embed that in an investment policy, and most investors, whether individuals, pension funds or trusts and foundations, are in any event incorporating these sorts of ESG and responsible investing criteria. But making it a legal requirement to align investment with charitable objectives could make it almost impossible for a trust or a foundation with diverse objectives to invest without sacrificing significant financial return, from which the trust or foundation’s grant-making activities are derived.
I am afraid that the overly bureaucratic processes we may be eliminating in other areas may inevitably grow in the investment area. I hope that they are not excessive, but I believe that the regulations that will detail what permanent endowments can do in the area of social investment should be a little bit bureaucratic.
Baroness Fraser of Craigmaddie (Con)
My Lords, I am delighted to speak on the Second Reading of this Bill. Charities are our society’s vital safety net, so it is important, to ensure public trust and confidence, that the regulatory and legislative framework relating to charities is up to date and fit for purpose.
I refer to my interests in that I am a trustee of charities. I am the chief executive of a Scottish charity, Cerebral Palsy Scotland, and a board member of the Scottish charity regulator, OSCR. I am speaking in a personal capacity.
A great deal of assurance is to be had from the extensive consultation with the sector and other interested parties before the Law Commission’s report was published, allowing a good level of confidence in the conclusions and recommendations coming out of that work. As the noble Lord, Lord Hodgson of Astley Abbotts, said, and I love his description,
“I found that charities faced a number of historic obstacles under the current law. These unnecessary burdens on trustees act like barnacles on a boat, causing a drag when all should be plain sailing … Although its recommendations may appear to be highly technical, cumulatively I believe they would have a huge impact on the sector, helping trustees to work effectively in modern-day conditions.”
As the Minister said in her introduction, this is a highly technical Bill, but this is key and we should not apologise for it. It is simple and it has a clear purpose. We should do all we can to ensure that charity trustees can indeed work effectively in modern-day conditions. It is frustrating, as the Explanatory Notes to this Bill outline, that:
“Charities legislation is commonly perceived as being complicated, uncertain and in places unduly burdensome.”
The Bill removes some of the complexity and inconsistencies that have made English charity law difficult to apply and to regulate.
The past year and a half has brought the need for charities to be able to operate effectively into very sharp focus as they, like other organisations, have often been left with unprecedented challenges due to the pandemic but with the added challenge that, as statutory and other community services were closed or redeployed, many of them were left to deal with a perfect storm of how to meet the increased, and sometimes different, needs of their beneficiaries at a time of restrictions on their ability to operate services and reduced fundraising opportunities. The demands on trustees to be flexible and responsive and to make quick decisions has never been more crucial; I hope that this Bill will enable them to do so. It is very positive for the charity sector in England and Wales that the Government are proceeding with this legislation.
However, like my noble friend Lord Hodgson of Astley Abbotts, I am not clear why the Government rejected the recommendation from the Law Commission report that would make it easier for the Charity Commission to appeal to a tribunal on rulings of a point of law.
I am grateful to my noble friend the Minister for her explanation that the financial thresholds in this Bill will be regularly reviewed and will be reviewed in 2022. There are, however, a few points in the Bill that I would like further clarification on. I apologise in advance if these might be points better raised in Committee—please accept my relative newness in this position as my excuse.
As the aim of the Bill is to ensure that trustees can work without undue burdens, I am confused by Clause 6(3), which seeks to ensure that small gifts of £120 per year or under do not have to be returned to donors if the particular charitable purpose cannot be met. Only when you read the Explanatory Notes is it made clear that the £120 excludes gift aid, but there is no mention in the Explanatory Notes, for example, of other charges such as those incurred by online giving platforms for either the donor or the charity.
Also, the Explanatory Notes are helpful in explaining that, where such a gift is received from two or more parties, whether they are treated as an individual donor for the purposes of the total amount of the gift should be determined in each case. Can the Minister suggest an example of when it would be appropriate to treat such a gift as a single donation? Surely it would be much easier for charities to decide that, if two individuals have given a joint gift of, say, £240 in a financial year, it should be treated as two separate gifts of £120 so that they would never be eligible to return the donation under this clause.
In Clause 6(4), the donation does not have to be returned if, after the agreed actions are taken, the donor is not identified. It is quite common for charities not to be able to find their donors—the original donor may be deceased—so I completely support the intention of this subsection. However, is this where consideration should be given to the scale of gifts? Should charities perhaps be obliged to try to track down not just the donor but the next of kin or executors if the gift is of significant value and that value could be specified?
I move on to Clause 7, which also deals with failed fundraising appeals. Yes, fundraising appeals absolutely may fail, as per the illustration in the Explanatory Notes, or may exceed their targets—how wonderful. I am struck, however, by the fact that there is no mention anywhere in this clause of beneficiaries. The Bill states that funds should go towards purposes that are,
“so far as reasonably practicable, similar to the specific … purposes for which the money … was given”.
I also understand that trustees absolutely will want to ensure that decisions are
“effective in light of current social and economic circumstances”,
but it can be the case that beneficiaries are overlooked to ensure organisational sustainability. The duty of trustees to act in the charity’s best interests is not a direction to preserve the charity for its own sake, so I am keen that there are no grey areas on this matter, to the detriment of beneficiaries and purpose.
Turning to Part 3, I welcome the recognition of potential confusion about the working names of charities, as opposed to their formal names, and that these are being addressed. However, here, I am struck by the contrast between the regulatory regimes of England and Wales and those of Scotland and Northern Ireland. Charities in England and Wales have to register only if they have an income of more than £5,000 a year, although elsewhere all charities of any size are included on the charity register. This means that there may be more than 100,000 other organisations that are not on the Charity Commission’s register. How are these organisations to be covered by Part 3? Although I appreciate that the Charity Commission does not currently have the resources to deal with the additional burden, regulation and a register of all charities supports public trust and confidence. I cannot help but feel that the Bill is an opportunity missed on that front.
As your Lordships can imagine, with my Scottish charities’ focus I have scrutinised the Bill for any unintended consequences or adverse impacts on cross-border charities. The Minister will be pleased to hear that I have not spotted any, although I will be keeping a close eye on this as the Bill progresses. I am also aware that there are certain improvements in this legislation that could be beneficial to the sector in Scotland and which I hope the Scottish Government may wish to replicate, preferably sooner rather than later.
I look forward to continuing to scrutinise and support the Bill as it makes its way through the House. I commend its purpose to ensure the smooth running of our charitable sector.
Lord Bhatia (Non-Afl) [V]
My Lords, I welcome and support the Bill. The contributions of the noble Baroness, Lady Prashar, and the noble Lord, Lord Hodgson, were excellent. I have just one question for the Minister. Does she agree that the ethnic minority charity sector remains weak, and can she say whether the Government will provide special funding for that sector?
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, the noble Baroness, Lady Gardner of Parkes, has withdrawn from the debate so I call the next speaker, the noble Lord, Lord Bilimoria.
Lord Bilimoria (CB) [V]
My Lords, on this Charities Bill, I declare my various interests as a trustee of charities, including the National Bereavement Partnership, the British Cardiac Research Trust and the Cobra Foundation. This Law Commission Bill makes a number of technical changes to charities law. The commission has said that
“uncertainties in the law and unnecessary regulation can disrupt charities’ activities, discourage participation and force charities to obtain expensive legal advice.”
These recommendations will simplify the regulation of charities and yet maintain the important safeguards for how they are run. The Government have welcomed the Law Commission’s report and recommendations; in fact, they accepted 36 out of 43 of those recommendations.
In its fantastic—as usual—briefing, the House of Lords Library summarised the changes as being
“to simplify the law around … changes to a charity’s governing documents … payments to trustees in certain circumstances for goods and services provided … using funds for ex gratia payments or using funds obtained in connection to specific fundraising campaigns for other purposes—
these are the cy-près powers that the noble Baroness, Lady Greengross, spoke of—
“utilising permanent endowments … and disposals of charity land.”
To put this into context, there are almost 170,000 registered charities in England and Wales, which now generate an income of approaching £100 billion. There are 700,000 individual trustees, and charities play a major role not just in society but in their huge contribution to our economy.
As the briefing explains, the Government have also acknowledged that charities legislation is
“commonly perceived as being complicated, uncertain and in places unduly burdensome”
and that this
“can disrupt a charity’s activities, discourage people from volunteering to become trustees and force charities to obtain”
legal advice, which is often expensive. The Government believe that this
“negatively effects the Charity Commission’s ability to regulate the sector.”
The Government have said that the changes will
“improve the efficiency of the sector, release more funds for use on charitable purposes rather than administration, and reduce unnecessary and overly bureaucratic regulation that not only increases the sector’s costs but also is a factor in discouraging people from volunteering to become trustees.”
The Law Commission highlighted the important balance between regulating charities and ensuring that they have the freedom to act in the best interests of their abilities and in the public interest. In a debate in May, the Minister, the noble Lord, Lord Wolfson of Tredegar, one of my university contemporaries, stressed the importance of protecting and regulating charities:
“Charities occupy a special place in our society, and the law should both protect and regulate them. The reforms that we introduce will remove or replace inappropriate and unnecessary burdens while safeguarding the public interest in ensuring that charities are properly run, so that charities will have more time and more resources to spend on their charitable objectives.”—[Official Report, 18/5/21; col. 471.]
The Minister, the noble Baroness, Lady Barran, said in response to the Law Commission’s recommendations:
“Ensuring that there is a modern, strong and flexible legal framework for charities is just one element of the Government’s work to create a more effective, sustainable and impactful charity sector. As the Secretary of State for Digital, Culture, Media and Sport commented in a recent speech, ‘there is huge power in civil society, and that it should be the government’s job to unlock it—not try to replace it, or end up stymying it.’ The Government will steward the sector, unlock new types of resources, from encouraging philanthropy”—
which I will come to—
“to leveraging finance, empowering volunteers to keep supporting their communities, and build a compelling picture of the enormous value that charities contribute to our economy and society.”
She could not have put it better.
Until June last year, I had the privilege for five years of chairing the advisory board of the Cambridge Judge Business School, one of the finest business schools in the world. While I was chairman I helped to found and establish the Centre for Strategic Philanthropy, based at the business school and the university, thanks to the benefaction of Badr Jafar, an alumnus of Cambridge University. The Centre for Strategic Philanthropy within the University of Cambridge Judge Business School is dedicated to enhancing the impact of strategic philanthropy both within and from global growth markets. Through a combination of rigorous research, executive education and the convening of diverse voices, the centre aims to become the leading hub of actionable knowledge to catalyse greater philanthropic impact from the world’s fastest-growing regions. It is headquartered in the UK at Cambridge, one of the finest universities in the world. The UK is seen as the headquarters of charities and charities expertise.
I quote Badr Jafar, the founding patron of the Centre for Strategic Philanthropy:
“Today, well over a trillion dollars of private philanthropic capital, more than triple the annual global development and humanitarian aid budgets combined, is deployed every single year. The evidence is also overwhelming that the world’s emerging economies are becoming an increasingly powerful source of philanthropic capital and social innovation. With the impending generational transition taking place around the world, now is the time to start building the cross-border networks that will empower the next generation of strategic philanthropists emerging from these markets, to question our own assumptions, and to facilitate the development of imaginative new solutions to some of the world’s greatest social and environmental challenges.”
This is huge. This is important not just for us here in the UK but globally.
Last year, at the beginning of the pandemic, I was privileged to become a trustee of the National Bereavement Partnership right from its beginning. It has carried out inspirational work throughout the pandemic. We have an inspirational CEO, Michaela Willis MBE. When I asked for her and our trust’s views on the Bill, she said that the National Bereavement Partnership believes that the Bill’s recommendations appear to be sensible, and that there has to be a certain amount of public scrutiny to keep the checks and balances in place regarding charity behaviour. We wholeheartedly agree that simplifying the law could apply to us. The charity’s governing documents need to be less laborious. Payments are made to trustees in certain circumstances for goods and services provided as, in some cases, that can be where the expertise and knowledge lie. It is a false economy to look for services elsewhere than might not be up to speed on the subject matter. The charity emphasises that it should be in certain circumstances, so it is practical.
Using funds for ex gratia payments is a particular barrier when it comes to volunteers and needs to be addressed. On specific fundraising campaigns for other purposes—the cy-près powers—it is important that there is project-specific funding, but it is not always the case that the piece of work concludes in the way it should or is planned to. In these cases, there should be the flexibility for funds to be transferred to a piece of work as close as possible to what they were donated for, within reason.
Charities provide a unique service. They are fundamental to society. They need to be regulated but also to be protected and cherished. Without them, much expertise would be lost. There must be a balance. Charities must be open, honest and accountable. Their accounts must be managed, audited and published for public scrutiny. On the flipside, charities need not be constrained by unnecessary legal burdens.
The National Bereavement Partnership has made a difference to the emotional well-being of callers—that is, the people who call in with very sad and tragic situations. It provides emotional support and therapeutic intervention, and is a conduit between other services, enabling long-term well-being. It adds value to NHS services, saving the Government money and keeping people out of the mental health system.
I conclude that the British charity sector is a jewel in the crown of our country. However, it is also a manifestation of the amazing spirit of benefaction among the British people. I will never forget my friend Sir Andrew Cahn once telling me something; he is the chair of WWF-UK, of which the Duke of Edinburgh was president for many years. Sir Andrew said that the WWF raises—well, the latest figure would be approaching £100 million a year. He said, “Did you know, Karan, that the vast majority of this money is not millions of pounds donated by big institutions and companies, but £10 and £20 in direct debits that individual citizens in this country donate, for animals in parts of the world where they will never go? They will never see those animals or meet the people who benefit from this charity”. That is the amazing British charitable spirit. It is that spirit that makes this country so amazing, and it makes our charities so incredible, amazing and phenomenal.
Baroness Hoey (Non-Afl)
My Lords, I refer to my declaration in the register of interests. I am the honorary president of a wonderful charity, the London Playing Fields Foundation.
There is clearly a huge amount of expertise in this Committee on charities and charitable law. I think we all recognise how charity lies at the heart of our society. No Government, however good, can ever do everything, so we need our charities. This has been evident during the pandemic, where charities have helped to alleviate the strain right across the country. Of course, we witnessed the contributions made so quickly and so hugely by the public to the heroic fundraising efforts for NHS charities made by the late Captain Sir Tom.
I welcome the changes being made, particularly as they will, I hope, help smaller charities, and the work that was done by the Law Commission report. I recognise that its report was built around the report done by the noble Lord, Lord Hodgson of Astley Abbotts. Having listened to his contribution earlier today, I can see why his report was supported so widely. I am not quite sure why it has taken nearly 10 years to begin to implement it, but I welcome it very much. I also welcome what he said about the situation at the Royal Albert Hall; I think that we have all heard and read about it, but he put it into context. I look forward to the Minister’s response to the question of why it has been left out of the Bill.
May I ask the Minister a couple of questions? Clause 24 and Schedule 1 apply in part to Northern Ireland and Scotland. I recognise that quite a lot of this will be taken forward by the Charity Commission for Northern Ireland, which is consulting at the moment, but can the Minister give us a little more detail on which part applies in part, if she understands my meaning?
The Minister mentioned the changes to remuneration to trustees and used the term “relatively small payments”. I share the concern expressed by the noble Baroness, Lady Rawlings, on payments to trustees. As the noble Baroness, Lady Goudie, said at the very beginning, when people give money to a charity they want to know and see what it is being used for. They want that transparency. I do not think most people who give small amounts to charities want to see it used to pay so-called volunteers—the trustees—and they do not want it spent on huge salaries for chief executives. We have seen some horrific salaries for chief executives, and the larger the charity, the larger the salary. Sometimes a smaller charity doing a lot of really good work in the same area can be completely squeezed out by these huge charities.
Public trust and confidence in our charities is still very high, but that can change. It is very important that all of us who care about the charitable sector speak out when we see some of these abuses that have happened because, in the long term, that will not give confidence to the public that the small amount—which is very hard earned, in many cases—that they give to something they care deeply about will actually be spent in the way that they thought it would be.
To mention Northern Ireland again, the recent Charity Commission for Northern Ireland trust and confidence survey demonstrated that 84% of people in Northern Ireland supported a charity in the previous six months. The Northern Ireland Council for Voluntary Action’s survey showed that 68% donated to charity. Of course, there is a difference between donating and supporting—in terms of being a volunteer—but I do not think any of those people want to see their money being spent on trustees. Trustees should do it because they want to donate their time, effort and expertise to a charity.
Finally, I hope that these provisions will reduce the regulatory pressure on trustees and reduce bureaucracy, making the governance of charities easier and perhaps making it less likely that they need to pay trustees. They should make it simpler and enable trustees to better get on with the job of helping their beneficiaries and maximising their impact, which is so important at this crucial time. Of course, we must not forget that none of these provisions should detract from adequate oversight of the Charity Commission. I hope the Bill will confer the right balance between the regulatory oversight and greater flexibility in charity administration with the associated reduction in administrative costs for charities.
Baroness Barker (LD)
I declare my interests as set out in the register. I preface my remarks by saying that it is a welcome return to see the Charity Commission doing what it alone can do—providing detailed expertise to charities to enable them to perform their functions to the best of their abilities—and getting away from its practice over the last three years of issuing generalised sweeping criticisms of the sector, which has done neither it nor the sector any good.
Before I turn to the details of the Bill, I am reminded that the last event I attended or hosted in your Lordships’ House last March, before Covid hit, was a reception for military charities. I was a rather unlikely stand-in for the noble Lord, Lord Dannatt, who was indisposed. I said to the people who asked me to take over at the last minute that it was possible that they could have found a Member of your Lordships’ House who was less like the noble Lord, Lord Dannatt, but I could not think of one right at that moment.
In preparation for that, I read a book that someone had given me by Peter Grant that details the development of philanthropy during the First World War. It is a great book, full of fascinating detail about newspaper appeals for socks and cigarettes to be sent to Belgium. They were gathered in mass amounts, and then bodies were left not knowing how to get them there without it costing a fortune. Fraudulent schemes were set up, as were duplicate schemes, all in the name of doing good for soldiers and for people displaced by the war. It is a very good and essential read for anybody interested in this area because it proves that, as the noble Lord, Lord Hodgson of Astley Abbotts, said, not a lot has changed in the charity world since 597, only the context in which things happen.
That is germane to the Bill. We are currently at a point when charities, which are regulated, whatever their form, and required under charity law to produce accounts and to be transparent about their support, find themselves up against entities that are called organisations but which may be nothing more than a couple of people with a Facebook page and crowdfunding. They have no accountability or transparency, yet the two are treated equally by the media and the general public. At some point, not in this Bill but in the next 10 years, we will have to return to the question of “What is a charity?” Perhaps that is something to which the noble Lord, Lord Hodgson of Astley Abbotts, might turn his considerable expertise.
In preparation for today’s debate I attempted to read Law Commission report 375—all 484 pages of it. Sadly it is no longer available in hard copy. I find that quite difficult, but I have done my best to get through it. It is important to go back to that source document, to read the Government’s response and then work through the Bill with the Explanatory Notes, because at each stage bits of detail emerge and get lost over time, which has led to this Bill. When we come to Committee we will have to be well informed about all the work at each stage so that we can consider the job before us, which is to determine how well the Law Commission has done what it said it was going to do, which was:
“To remove unnecessary regulation and bureaucracy”,
to ensure that appropriate regulation is in place,
“To increase the flexibility of trustees to make decisions in the best interests of their charities … To confer wider or additional powers on the Charity Commission … to increase its effectiveness … To ensure adequate protection of charity property”,
and
“To remove inconsistencies and complexities in the law”.
We need to do that because, in seeking to make the regime governing the regulation of charities somewhat more flexible, we risk handing the media extra sticks with which to beat charities. Some parts of our media have causes that they do not like and they are always willing to jump on a charity for any reason. We have to gauge whether this job has been done properly.
I welcome the proposals to make it easier and less cumbersome to change the governing documents of a charity. I have done that, and it is quite onerous. If we boil down the Law Commission’s proposals, it wants to enable charities to change not what they exist to do but the way in which they go about achieving what they exist to do. In that respect, those proposals are welcome. That said, there is a principle in all this that the more freedom charities have to make amendments to things such as their governing documents, the greater the onus on them should be to explain directly to the general public, in their annual reports, what they are doing and how they are doing it.
On the matter of payments of trustees for goods, the noble Lord, Lord Hodgson of Astley Abbots, set out a case for that in his report acceptably well. But I think it is necessary for there to be guidance for trustees on how they should use this power and on good practice, such as whether they should be doing things like getting good quotes or taking into account issues such as social value.
The powers of the commission to change the names of a charity, or establish who the trustees are, are quite a technical area, into which I would like us to take a deeper look, because it is not clear to me, from the Explanatory Notes, why the Charity Commission would be better placed to determine who was a trustee of a charity than the charity itself. Certainly, the power to challenge the registration of a charity’s name is important, but I would like to know from the Minister how members of the public or other charities could object to the registration of a new charity with a particular name, because, presumably, that is the trigger for action by the Charity Commission. It would be really helpful if the Minister could shed some more light on that.
People working in the field of charities have wanted cy-près schemes to be reformed for a long time. My own example is being approached by a bunch of trustees who had a small endowment, the purpose of which was to provide coal for the needy widows of a parish in Sussex. In the 1990s, they made the not unreasonable assessment that anybody who was using coal was probably cooking on an Aga and did not really need charitable help to get by, so they wanted to try and find a fuel property charity.
The noble Baroness, Lady Fraser of Craigmaddie, mentioned beneficiaries. I think it is implicit that beneficiaries are taken into account for any cy-près schemes, but she wanted to see that there were no grey areas. I am afraid there are nearly always grey areas in cy-près schemes, but the question is how the people making the decision explain and justify their treatment of those grey areas. It is good to see that there will be a quinquennial review of the amounts of money that are taken in.
I broadly welcome the process for updating some of the archaic processes for amending governing documents of statutory charities and royal charter bodies. My noble friend Lord Wallace of Saltaire cannot be here today, sadly, but he hopes to deal with that in more detail at future stages, especially with regard to large educational establishments. It is important to note that royal charter bodies cover a huge range of entities, from ancient educational charities through to organisations such as the National Citizen Service, which, frankly, should never have been given royal charter status in the first place.
One matter that I would like us, in Committee, to spend quite a considerable amount of time on is insolvency of trusts and insolvency of trustees of trusts. It is a very technical part of the Law Commission’s briefing, on which I think the noble Lord, Lord Hodgson of Astley Abbots, has much to tell us, particularly in relation to the sequencing of the insolvency and the impact that that has on creditors—creditors both of the trust and of the trustee. That is the kind of mind-bending detail that I think Members of your Lordships’ House were put in this place to deal with.
I agree with the noble Lord, Lord Hodgson, that we are under a particular obligation to deal with the two main recommendations of the Law Commission that the Government have rejected. On recommendation 40, in relation to the charity tribunal, infrastructure organisations within the charity sector wanted to support the Law Commission proposal that
“it should be possible to obtain authorisation to pursue ‘charity proceedings’ under section 115 of the Charities Act 2011 from either the court or the Charity Commission … where the Charity Commission would face an actual or apparent conflict of interests”.
The question of “conflict” for the Charity Commission is one that has been dodged, and we should return to that. The second recommendation relates to the role of the Attorney-General. The noble Lord, Lord Hodgson, set out the case on that matter in a way that was memorably clear. There is no need for me to reiterate it, but we should go back to that as well.
I have two minor points. I want to ask the Minister about the question of access to the governing document of a charity. I have spent a considerable amount of time looking at governing documents and going through the register of charities. The register of charities has been given a new format, and I believe that there is now a shortened version of the governing documents of charities on it, not the full document. Can she say what obligation there is on any charity to make its full governing document accessible to the public?
Finally, as this is a Law Commission Bill, can the noble Baroness assure us that, in Committee—which will not be in the usual format for our House but slightly different—we will be given time to go into matters of very great detail? These Bills come along once in a very long while; they deal with matters that are of immense importance to a very few people and require detailed and expert consideration. With due deference to the other House, it is for those of us in this House who have the expertise and the time to give to matters such as this, which may seem trivial to others, to do so. For that reason, I strongly commend to noble Lords that we rally behind the noble Lord, Lord Hodgson of Astley Abbotts, in asking that the issue that he raised about the Attorney-General be considered extensively before the Bill leaves this House.
I am very appreciative of all the work that has been done to get this Bill to this stage, and I very much look forward to working with Members of your Lordships’ House to take it through its further stages.
Lord Ponsonby of Shulbrede (Lab)
My Lords, I thank the Minister for introducing the Bill. This debate has demonstrated the great experience in this Committee. Before I get into my speech, I want to comment particularly on the two speeches by the noble Baronesses, Lady Fraser of Craigmaddie and Lady Greengross. The noble Baroness, Lady Fraser, is, I understand, the current serving chief executive of a charity, and the noble Baroness, Lady Greengross, was for many years chief executive of Age Concern. They both made different points, though similar in nature, about the detail of the rules. My wife was a charity CEO for 25 years, and I recognise the nature of those concerns and the detail of how you sort out the rules. It is the constant concern of CEOs, as I can attest, to make sure that the rules of charities are properly followed for the benefit of the interests of the organisation that they are running.
We in the Labour Party support this Bill. Charities are a force for good in our country. Millions of people regularly donate to them and support their primary objective: to help our fellow citizens. Some 170,000 charities in England and Wales are registered with the Charity Commission, with a combined annual income of around £74 billion. The purpose of this Bill is to address some of the nitty-gritty administrative issues that affect the running of charities. This will mean that more time and money can be spent on the charities’ primary purposes rather than burdensome administrative compliance. The Minister rightly made the point that this will be disproportionately beneficial to smaller charities.
From the Law Commission’s Eleventh Programme of Law Reform—including the initial review in 2012 by the noble Lord, Lord Hodgson—through to the most recent Law Commission reports, there has been extensive consultation and collaboration across the sector to arrive at today’s Bill. As the Library briefing states:
“The bill includes changes to simplify the law around … changes to a charity’s governing documents … payments to trustees in certain circumstances for goods and services … using funds for ex gratia payments or using funds obtained in connection to specific fundraising campaigns for other purposes … utilising permanent endowments; and disposals of charity land.”
The Law Commission’s recommendations were first published in 2017. The Government accepted most of the changes, many of which seemed technical in nature. However, as the briefing points out, the Law Commission highlighted a central point around
“the important balance between regulating charities and ensuring they have the freedom to act to the best of their abilities and in the public interest”.
At the all-Peers meeting kindly hosted by the Minister on 24 June, I made a point regarding responsible investments by charities that are in line with their purpose and values. I understand that two court cases exploring the definition of “responsible investment” are under way, and there is a draft guidance confirming that charities are free to adopt their own investment criteria. Since that date, I have received a helpful note from the Charity Commission confirming that it will put on hold the publication of its final guidance pending the outcome of those cases, that the law remains permissive in this area and that trustees can engage positively with responsible investment considerations should they choose to do so.
The noble Baroness, Lady Hayman, spoke to this point; my noble friend Lord Chandos challenged a number of the points that she made. I must say, this is an interesting debate that we will no doubt have again in future fora and future months, but I would be grateful if the Minister could confirm that this Bill will have no impact on the final guidance or the outcome of the court cases.
I have been fortunate enough to talk to two senior lawyers, Nicola Evans and Joe Coleman, who were intimately involved in the preparation of the Charity Law Association’s response to the consultation. They have given me some idea of the extent and breadth of the consultations undertaken. I raise two issues; they may be more suited to being raised in Committee, but I raise them here anyway. First, I understand that the Law Commission was not consulted on the extension of powers to stop the use of working names for a charity. This is a sensitive issue as it involves a clash of jurisdictions between intellectual property law, corporate law—as operated through Companies House—and the Charity Commission. I have heard that there is concern that this lack of consultation could lead to unforeseen circumstances. A second point that has been raised with me is on whether a surveyor’s report should be required when a charity sells land. It was felt that, given the huge range and size of charities, a single or simplistic rule would be inappropriate.
I understand that because of the nature of this Bill there are many detailed points and that some more contentious points are not part of this Bill. Nevertheless, I hope we can examine some of these detailed points as the Bill progresses through the special procedures for Law Commission Bills.
I highlight a couple of other points made by noble Lords during this debate. Both the noble Baroness, Lady Goudie, and the noble Lord, Lord Stevenson, raised the monitoring of borrowing by endowments. This is an important point and I would be interested to hear the Minister’s response on that.
I also thought that the idea that the noble Lord, Lord Naseby, had over breakfast this morning, of an equivalent of gift aid for the social care sector, was an interesting one, and I look forward to him developing that on future occasions.
Baroness Barran (Con)
My Lords, I thank all noble Lords for their valuable contributions today and, in particular, I congratulate the noble Baroness, Lady Barker, for having ploughed through the Law Commission report and all associated documentation. I had naively hoped I might be able to get through all your Lordships’ points in my closing speech, but I feel quite a long letter coming on. I will write to your Lordships about anything I cannot cover in the next 20 minutes.
My noble friend Lord Hodgson, and the noble Lords, Lord Ponsonby and Lord Stevenson of Balmacara, all highlighted the importance of effective implementation and the need, in the words of the noble Lord, Lord Ponsonby, to “sort out the rules” and make sure they are clear. This is a really valuable point. We will publish an implementation plan before the Bill completes its passage and aim to prioritise the implementation of provisions that will most benefit the sector. There will be need for new or updated guidance from the Charity Commission, which will need to change some of its systems and processes to support the new measures. The Charity Commission recognises the importance of clear and straightforward guidance for trustees, and I commend the new five-minute guides for trustees to any of your Lordships who have not seen them. They have proved extremely popular in the last year.
The Law Commission’s recommendations relating to expanding the range of advisers qualified to advise charities on land transactions and the matters to be reported on in such advice will require secondary legislation subject to the negative procedure, which DCMS will take forward in 2022. Similarly, the requirement to review various financial thresholds in the Charities Act 2011, with the view to increase them in line with inflation, will also be taken forward by the department in 2022, also via regulations subject to the negative procedure.
I will deal next with the recommendations from the Law Commission that the Government did not accept, starting with the one raised by my noble friends Lord Hodgson and Lady Rawlings, the noble Baroness, Lady Barker, and others in relation to the role of the Attorney-General in references to the charity tribunal. I understand that my noble friend Lord Hodgson is unhappy that the Government did not accept this recommendation. However, the Attorney-General has an important and valued role as protector of charities, and it would be wrong to change this as a result of a single complex case, as cited in the case of the Royal Albert Hall. To put this in context: references to the tribunal are rare; there have only been two since it was set up in 2009.
My noble friend Lord Naseby, the noble Baroness, Lady Barker, and my noble friend Lord Hodgson also referred to recommendation 40, which suggests that
“it should be possible to obtain authorisation to pursue ‘charity proceedings’ … from either the court or the Charity Commission in circumstances where”
there may be a conflict of interest on behalf of the Charity Commission. The existing arrangements protect charity assets by preventing charity funds being wasted on litigation that is without merit and ensure that disputes are dealt with in the appropriate forum. The Charity Commission is concerned that allowing applicants to seek authorisation from the court directly would significantly weaken these protections because the court would not be expressly obliged to consider whether the dispute could be resolved by the commission.
In the small number of cases where a conflict arises, it should be dealt with in a more proportionate manner that does not risk losing the protections discussed above. For example, the Charity Commission could institute robust information barriers and ensure that the case officers and legal advisers who consider the Section 115 application are not in any way involved in the substantive claim.
I welcome my noble friend Lady Fraser of Craigmaddie and all her expertise. I look forward to picking her brains and discussing many of the issues in this area. She and the noble Baroness, Lady Hoey, talked about the territorial extent of the Bill. In particular, the noble Baroness, Lady Hoey, asked about the extent of Clause 24 and Schedule 1. Clause 24 makes amendments to, and repeals sections of, the Universities and College Estates Act 1925, which applies to named institutions in England and has UK-wide extent. Schedule 1 makes the changes necessary to remove redundant references to that Act from other legislation. Some of the provisions that are amended by Schedule 1 also extend to Scotland or to the UK.
I turn to permanent endowments, which were raised by the noble Viscount, Lord Chandos, and a number of your Lordships. The reforms to permanent endowment in the Bill maintain the core principle of such an endowment: that it is intended to be preserved in the long term. However, the reforms aim to give trustees the flexibility to achieve that aim by looking across the portfolio as a whole, as I explained in my opening remarks. The noble Viscount questioned how this would work in practice; I think he probed the example given in the Explanatory Notes of 50% of a charity’s endowment being put into a social investment where there would be an anticipated loss.
There are a number of ways that this will work in practice. First, it is worth being clear that trustees can decide not to use the power if it is not appropriate for them. Secondly, they can review the distribution ratio in their grant-making if they feel that the overall return from the portfolio might be reduced in financial terms but that the social impact would be enhanced in line with their mission. They might also be able to offset modest losses by maintaining an existing investment policy or, potentially, take on higher risk in the portfolio. I know that your Lordships are aware that charitable foundations will take varying degrees of risk with their assets. I accept that one would have to have a very conservative existing investment policy for the 50% example to work out in real life without having to take on significant additional risk.
The noble Viscount asked why this provision was included in the Bill. It was at the request of the Association of Charitable Foundations. He also asked whether the Charity Commission would issue guidance that would include limits on the concentration of risk. The commission will consider the factors that trustees will need to have regard to in relation to their investments in this area.
The noble Baroness, Lady Goudie, asked about borrowing from a permanent endowment. Where charities borrow from their permanent endowment, they will have to report on their borrowing in accordance with their obligations under the statement of recommended practice. The Bill also includes provisions requiring the trustees to seek directions from the Charity Commission if they face difficulties repaying any borrowing. The noble Lord, Lord Ponsonby, also raised this.
My noble friend Lord Naseby asked whether there should be a fixed percentage that could be borrowed from a permanent endowment. I can confirm that the percentage is set out clearly in the Bill. Trustees can borrow up to 25% of the value of the fund, subject to a maximum repayment period of 20 years.
The noble Lord, Lord Stevenson of Balmacara, asked how these provisions would be monitored. He also asked about provisions relating to failed fundraising appeals. The department and the Charity Commission will do that monitoring. There is flexibility in the Bill to make changes by secondary legislation to financial thresholds to address any concerns.
Moving on from permanent endowments, the noble Baroness, Lady Goudie, asked about commercial fundraising partners. Several protections are already in place where charities engage with external commercial fundraising partners. They are designed to ensure transparency and were last updated in 2016.
The noble Baroness, Lady Hayman, and the noble Lord, Lord Ponsonby, asked about responsible investing. I can confirm that the Bill will have no impact on the Charity Commission’s guidance. It has been concerned with understanding how best to help charities invest responsibly. The consultation results are expected to be published later this summer. The commission is clear that trustees of all charities are free to decide whether to adopt responsible investment practices and trustees should have confidence that they can, under the current law, invest in a particular manner where they choose to do so.
The noble Baroness, Lady Hayman, asked about responsible investing and the role of the regulator in relation to net-zero obligations. Climate change is obviously a factor that trustees may take into consideration when investing. The law currently gives trustees broad discretion in this decision-making, but when trustees make decisions about responsible investing or any form of investing they need to balance the immediate and the longer-term needs of beneficiaries. The noble Baroness will be aware of things such as the UN principles for responsible investment, which have been adopted by many charitable foundations. They are creating quite a lot of information and helpful examples for trustees.
My noble friend Lady Fraser asked for examples relating to Clause 6. The Bill requires trustees to identify the donor, as my noble friend explained, which could be a single person or a group of people. There are cases in law where multiple people are treated as one person—for example, a husband and wife can together be a single tenant under a lease. The Bill also requires the donation to be identified, and whether that includes or excludes fees will depend on the individual circumstances of the case. There is also flexibility to decide what steps should be taken to trace donors, so that could include additional steps to track down donors of large gifts. The requirement is “reasonable” steps, and that needs to be agreed with the Charity Commission.
The noble Baroness, Lady Greengross, made a good point about the need for checks and balances, particularly for fundraising appeals. However, the current law requires charities to contact donors to offer to return their donation. This can sometimes be disproportionate to the size of the individual donations. I hope she agrees that this change protects donors’ wishes while reducing administrative burdens.
The noble Lord, Lord Stevenson, asked for an example of how the ex gratia elements in the Bill would work in practice. For example, it could be that a testator has left money to a charity in their will and gave their solicitor instructions to leave some of the money to a family member instead, but died before the will was changed. Legally, the charity could and must take the money, but morally it might wish to make a payment to the family member.
The noble Baroness, Lady Prashar, and the noble Lord, Lord Stevenson, asked about sufficient resources and powers for the Charity Commission. Parliament strengthened the commission’s powers in the Charities (Protection and Social Investment) Act 2016. We published our review of that Act in March last year, which concluded that the powers were being used proportionately and effectively. The Charity Commission received additional funding in 2018 and in its 2019 and 2020 spending review settlements to reflect its increased caseload.
My noble friend Lady Rawlings, the noble Baroness, Lady Hoey, and I think the noble Lord, Lord Bilimoria, agreed with these principles about the importance of transparency. My noble friend Lady Rawlings also made important remarks about levels of executive remuneration. If I may, I will deal with those first. We recognise that executive remuneration in charities remains a public concern. The Government’s position is that charities should be transparent about executive remuneration so that members of the public can decide whether they want to support a charity. Currently, registered charities, apart from the very smallest, are legally required to provide details of the number of staff in pay bands over £60,000 in their annual return. This is now available on the Charity Commission’s register of charities, which is also available online. Some charities go further and publish full details of executive remuneration as a matter of good practice, following advice from the NCVO.
My noble friend raised issues about overheads and administration costs. I think some of the wider issues around transparency relate to the fact that we use “charity” to cover organisations made up only of volunteers with an income of just a few thousand pounds—or maybe even a few hundred pounds—a year, and we use the same term for charities that spend hundreds of millions of pounds a year and are, for example, important delivery partners to government and local government. In some ways it is unhelpful that we do that.
However, I say to my noble friend and the noble Baroness, Lady Hoey, that some of the requirements for administration costs relate to requirements put on charities by their funders. I hold my hand up and put central and local government in that in terms of requirements for accountability and regulation to relation to safeguarding, but I take the points made by both noble Baronesses.
There were a number of other points, which I may need to cover in writing. The noble Lord, Lord Bhatia, asked whether I agreed that charities led by people from black and other minority communities are weak. I think he is right that many of those organisations have historically struggled to access funding. As part of the community match challenge, which my department did with a number of philanthropists and foundations, charities led by people of colour and other minority communities were prioritised in a number of funding streams. We are looking forward to hearing how that worked in practice.
My noble friends Lord Hodgson and Lady Rawlings and the noble Lord, Lord Stevenson, asked me to clarify whether we would be returning to some issues in Committee. I remind your Lordships that, as a Law Commission Bill and with agreement from the usual channels because of its uncontroversial nature, the Bill follows the Special Public Bill Committee procedure. Amendments can therefore be proposed but the Government would resist any amendment that is not directly related to implementing the Law Commission’s recommendations. I genuinely welcome debate on issues covered in the Bill and any other issues that noble Lords wish to raise, and I would be delighted to meet any noble Lord separately to discuss issues which are outside the scope of the Law Commission’s recommendations.
As ever, I am out of time. In closing, I reiterate the purpose of the Bill: that the time and money spent by charities to unpick unduly burdensome and arbitrary processes should instead be channelled into their valuable work. We have a duty to shape legislation to work for those delivering such vital work, especially in unprecedented times when charities have been working tirelessly to help those in need. Many noble Lords have rightly celebrated the role that charities have played during the pandemic, and I echo their sentiments. I look forward to further detailed discussion on the Bill and the important changes it will bring that are much anticipated by the charities sector.