Charities (Protection and Social Investment) Bill [HL]

Baroness Barker Excerpts

Tuesday 23rd June 2015 Grand Committee

Moved by

[Baroness Barker]

1: Clause 1, page 2, line 6, leave out “how” and insert “when and where”

[Baroness Barker (LD)]

My Lords, good afternoon. I welcome the noble Lord, Lord Bridges, to his first Committee. No doubt he has been briefed extensively and told that these are occasions on which their Lordships are allowed to do absolutely anything they like. I think this is the point of maximum terror for the spokesperson, although I am sure we will treat him gently.

This might well seem the most pedantic amendment that noble Lords have ever seen but we are dealing with charity law, are we not? Let us start as we mean to go on. However, it is a rather important amendment. I want to start the Committee’s deliberations by trying to ensure that, throughout our proceedings, we do not stray into the realms of viewing this legislation simply in terms of the extent to which it adds to the arsenal of weapons at the disposal of the commission and without thinking of the impact that some of these measures can have on trustees.

When some of us undertook the work of the scrutiny committee, under the able chairmanship of the noble and learned Lord, Lord Hope of Craighead, we were presented with witnesses who were, by and large, people with professional interests from around the charity world. At times, we rather lost the sense that on the end of this legislation will be individual trustees, the majority of whom we know are perfectly decent and honest. Just a few are not.

On the committee, we considered at some length whether this power to issue a formal warning was really necessary. In the end, we were persuaded that on balance—it was on balance—perhaps the Charity Commission could make fair and good use of it to issue a warning rather than open a statutory inquiry and go through all that that entails. Simply having the power to issue a warning to trustees where it was considered that the actions in which they were engaged presented a fairly low-level risk to the charity or to charities in general is absolutely fine. I agree with that. However, it is still a public warning. It is still something likely to cast a shadow over, if not leave a stain on, a person’s reputation. The majority of trustees hold the commission in very high regard. They take very seriously the actions of the commission. For the majority of trustees the prospect of a public warning would actually be quite difficult for them personally if not professionally.

We deliberated long and hard, and were influenced a great deal by the wisdom of the noble Lord, Lord Hodgson. He argued that this was meant to be a proportionate response to very minor misdemeanours, albeit recurring ones, and because this is not meant to be a draconian power, we should not allow an appeal mechanism, making the process a bureaucratic nightmare. I agree, but that makes it all the more important that trustees are alerted in good time that they may be the recipients of a warning, giving them a chance to put right their failures. That is what this power is supposed to be about—the prevention of fairly minor misdemeanours.

For that reason, it is important to ensure that people know where and when the warning will be published. It is one thing for a notice to be published on a part of the Charity Commission’s website, where only those of us who are sufficiently intrepid or boring to make our way will find it. It is quite another for it to be published prominently somewhere in a local paper, for example—if local papers still exist—in an area in which the charity operates. That could have quite a profound and damaging effect on the charity’s reputation.

In putting this apparently small and fussy amendment before your Lordships, I am trying to echo the points made by the Charity Law Association which thinks that trustees ought to be given fair notice that they will be subject to this so that they can try to put matters right. If we do that, this power will serve to act in the preventive way that was envisaged rather than being a rather heavy-handed hammer to crack a nut. In that spirit, I beg to move.

[Lord Hope of Craighead (CB)]

My Lords, there is a great deal that the noble Baroness, Lady Barker, said with which I agree. Perhaps I can take this opportunity to pay my own tribute to the work that she, along with other Members of your Lordships’ House who are present, did on the committee. There is a great deal of force in her point about the importance of the notice that is being given to trustees as to what the Charity Commission wants to do with regard to publication. However, I have a concern about the removal of the word “how” and the substitution of the words “when and where” for this reason: when you think carefully about what the words really mean, the effect of the amendment is to narrow the amount of the information that is required by the provision. There are other things built into the word “how” which are not there—the manner in which this is to be done, and how often, are two examples. One point that the Charity Law Association raised with us and is in a memorandum it sent to us in connection with the Committee stage of the Bill is the element of publicity itself and whether anonymity is to be given to the trustees who are the subject of the publication. If one restricts the amount of information simply to “where” and “when”, it leaves out the possibility of further inquiry as to the precise way in which this is to be done.

I appreciate the word “how”. After all, a three letter word seems very weak but, if you think about it, it is actually quite a powerful word because it embraces so much within it. If you read that together with what is in subsection (6) which enables people to make representations as to “how”—I repeat the word “how”—the publication is to be done, one can see that it gives scope for a good deal more inquiry.

I have huge respect for the noble Baroness, Lady Barker—I am entirely in sympathy with what she is seeking to do—but I would respectfully suggest that “how” is probably the best word to use. If it is to be replaced by something else, then there would need to be more in it than simply “where” and “when”. I find that a little untidy, which is why I suggest that we leave the word “how” as it is.

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[Baroness Barker]

My Lords, I thank noble Lords for the range of contributions, which showed just how important a three-letter word can be. I say to the noble Lord, Lord Watson of Invergowrie, that I speak Scottish as well. It is a good job that the word “aye” is not written into legislation very often because it has a multitude of meanings.

I thank the Minister for his response. I proposed this amendment for two principal reasons. One was picked up by the noble Lord, Lord Hodgson of Astley Abbotts. When one works with charity trustees, as I have done a lot, it is not unusual for the administration and so on to take much, much longer than it would in, say, a commercial firm. Simply because people are volunteers, processes take time to complete. Whenever I drew up things such as grievance and disciplinary procedures, I used to look at people who had grievance procedures and had taken them either from a local authority or from a standard suggestion by lawyers. The timescales were longer because things just took longer to do. The noble Lord, Lord Hodgson, is right that it is necessary to have something that concentrates the minds of trustees. It is important that they say, “We have to sort this by this date or else this warning is going to be issued”.

There is a second reason why I thought it important to put the amendment forward. The Minister said that the Charity Commission would, after a period of time, remove notices and archive them. However, these days, given the development of the web, the issuing of a statement is irrevocable—it is there for ever. I therefore think that it behoves us all to be slightly more careful than we might otherwise have been in the days when things were issued solely on paper and could be torn up without anybody knowing. We need to be that bit more careful about the way in which we pursue these matters.

I bow to the assessment of the terminology given by the noble and learned Lord, Lord Hope of Craighead. I understand the inclusivity of words which lawyers love so well, but I rather favour the suggestion of the noble and learned Lord, Lord Scott, that we should perhaps think about putting all three of these words together. It seems that if the Charity Commission is to exercise this power, it needs to give the utmost consideration to how it communicates with trustees. The one thing that a charity and a charity trustee must value above all else is their reputation. That is the thing that is most vulnerable to attack.

I thank noble Lords for taking part in this debate, which I hope they think was useful, and for the moment I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

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[Lord Hodgson of Astley Abbotts]

My Lords, I would like to focus on Amendment 2. I do not doubt that it is an exceptionally well-meaning amendment. If that sounds patronising, I do not mean to be at all; I think that it is very well meaning. We have all been horrified by the Jimmy Savile cases and the other cases of that nature, and we all want to do everything we can to protect children. The easy option is to say, “Absolutely, we should agree to this”, and that would avoid the by-product that one might be accused of being careless about the safety of children.

However, this afternoon I shall resist that temptation and ask my noble friend to reject the amendment. I do so on three grounds: those of efficacy, proportionality and impact. I want to say a word about each of those in turn but, before doing so, I draw the Committee’s attention to the fact that, before doing the charities review, I produced another report for the Government on what stopped people volunteering—what stopped people giving money and their time. The report was called Unshackling Good Neighbours. I took a lot of evidence from people about this and I should like to refer to some of it.

First, on efficacy, there are not many good outcomes from the terrible saga of Jimmy Savile and other prominent people, but one is that now the doziest trustee of the sleepiest charity is aware of CRB vetting and barring, as well as the legislation and the importance of complying with it. That is for two reasons: first, the risk to trustees themselves if they fail to do so; and, secondly, the risk to the charity they represent. We were talking about fundraising. The rows that there have been over unauthorised fundraising will be as nothing compared with the damage to a charity’s reputation if it is shown to be light-handed over the need to check its volunteers as appropriate.

The evidence that I had when preparing the Unshackling Good Neighbours report was that screening to prevent undesirable individuals becoming involved with children or vulnerable adults is now pretty fine. Indeed, if I heard the noble Baroness aright, the example that she gave was from 2010, about five years ago. We learned that the dangers, such as they were, were not so much within the institutions, because these undesirable people go where the softer targets are. They know that they are going to be checked if they work in schools with vulnerable adults, so the dangers are outside the school gates and, above all, on the internet, and that is where society needs to apply the pressure to ensure that our children are safe. Therefore, at the moment I do not see why this amendment would add to the efficacy of the vetting and barring arrangements vis-à-vis charities.

Secondly, on proportionality, vetting and barring legislation has nothing to do with charity law. It is the statute on its own that needs to be enforced. Vetting and barring is to do with a well-run organisation, whether it is a charity or not, but it does not particularly apply to charities. I think that government departments and the police need to enforce their own legislation and not pass it around, trying to find somebody else to do the checking for them. I am always concerned that if more and more is passed to charity trustees, fewer and fewer people will wish to take on the risks and responsibilities of what appears to be becoming a very one-sided state of affairs. If, as I believe, the mesh on the screen is pretty fine, should we be imposing another specific role on the Charity Commission? It should do it anyway, and in any case it has the powers to ask for this. The commission is already stretched. Vetting and barring is a role that is not part of charity law and there is already an established enforcement procedure for it.

If we are concerned about the situation with charities, why are we concentrating just on vetting and barring? Why do we not include health and safety? That, too, is very risky for people. Without sounding too flippant about it, a school headmaster whom I talked to said, “Actually, if you want to safeguard children with a new level of screening, the best way is to make sure that everybody everywhere drives at below 30 miles an hour, because that is how most children are injured”. Therefore, I think that proportionality is the second important issue.

The third is the question of impact. Surely our shared objective must be to encourage as many of our fellow citizens as possible to become involved in our civil society and to volunteer. It may be strange to the Committee but many potential volunteers find vetting and barring legislation intrusive, especially in the way that it is implemented and shows a lack of personal trust. The law says—I think that the Minister will put me right if I have got this wrong—that it is a question of frequent and intensive contact. Nervous trustees interpret those words pretty widely, and amendments like this will increase that nervousness and increase the likelihood of wholesale vetting and barring checks even when they are not needed.

One of the examples that I received was from a retired doctor living in the north of England: she was 65 and wished to do some work reading to Alzheimer’s patients. She was required to carry out the CRB vetting and barring check. She said to me, “Look, I’ve been before the GMC now for 35 years and if you can’t trust me now, what else do you require from me? I’m not going to do it as a matter of principle”, and she did not. That seems to me to be a shame. It is important that we do not allow this to become out of all proportion.

I have a second example, from a lady who got involved in a Manchester drama group. She was required to be checked and was happy about that but, she says,

“having been approved, we were invited to a session with the local child protection officer. I came away from that meeting with a number of very serious questions as to whether I should get involved with this sort of group. The talk left me feeling I would potentially be placing myself in situations of real risk. The child protection officer focussed the session on ensuring no adult put themselves in a vulnerable position e.g. if a child requests to go to the toilet—in no circumstance should an adult accompany them. If a child (with particular reference to girls) falls and cuts her knee, whilst wearing tights—under no circumstances should any adults remove the girl’s tights and help stem the bleed. No adult, whatever sex, should ever be alone with either one or more children. Needless to say, I came away from the session questioning the sense in many of the messages conveyed. As a caring responsible adult … I did not feel at all comfortable with the prospect of not being able to help an injured child”.

In accepting the spirit of the noble Baroness’s amendment, we have to be prepared to step back from this issue and accept that there is another side, however difficult it is to interpret. Why does this matter so much to us? All of us, particularly as parents, are of course horrified by child abuse and wish to stamp it out. Less attractively, however, there is an industry out there that actually profits from CRB vetting and barring checks. If noble Lords receive the same emails that I do, they will have had one today from one of the agencies that provide vetting and barring checks saying, “If you get checks through us for the next month, we’ll put £1 of the check cost towards charity because our chief executive’s going to run a marathon”—a way of appearing user-friendly. That is fine, but they are not going to tell us that fewer checks are needed; they will tell us that we need more. Some of the big charities have vetting and barring sections, and they too—after all, it is their job—are going to say, “We need more checks and more emphasis on them; that is the right way forward”.

I am not so sure. I think that right now the mesh performs its task pretty well. Is it perfect? Of course not. Whatever the size of the mesh, though, there will be failures, and when they happen we shall be told by someone that if the mesh had been finer we would have caught the person in question, and that will be very hard to rebut. Still, we need to stand back now and not impose further responsibilities on the Charity Commission that, as a by-product, may reduce the willingness to volunteer.

[Baroness Barker]

My Lords, I wonder if I might ask the noble Baroness, Lady Hayter, a question about her Amendment 11, which, as she explained quite clearly, deals with children. A lot of my work with charities is about vulnerable adults. In fact, the noble Lord, Lord Hodgson of Astley Abbotts, is right: if there has been any silver lining to the horrors that have been unveiled over the last five years it is that there is now a much clearer focus on the need to protect children in all settings. That includes in charities.

The law governing abuse of vulnerable adults is much less robust. If one were to think about this in a strategic way, the increase in dementia that will happen over the next 10 to 20 years, barring the discovery of an effective medical treatment, means that scope for abuse of older people will be far greater than it is now. That is something to which good charities—there are many of them—are alive. They put in place robust procedures with their staff and their volunteers. I happen to think that it is no less serious than abuse of children. If I have an objection to that amendment it is that omission.

[Baroness Hayter of Kentish Town]

I believe we are still on Amendment 7. I will deal with that when we come to Amendment 11.

[Baroness Barker]

I am sorry; I thought that they had been grouped together. I apologise to the noble Baroness.

[Lord Hope of Craighead]

My Lords, I will say a word or two about Amendment 7, which seeks to add a new “case K”, where:

“P has been found guilty of a sexual offence or has been placed on the sex offenders register”.

I will sound a note of caution about this amendment, for a variety of reasons.

The previous cases listed, some of which are the subject of other amendments, deal with incidences of dishonesty, failure to observe court orders and things of that kind. They cast doubt on the probity of the individual managing trust funds and are reasons for thinking that there might be some mismanagement of the funds. Indeed, terrorism is added, for reasons that we all understand. What is being introduced here is something that is not generic to the others, although it deals with an undoubtedly very disturbing social problem, which is people who abuse children, although it is not confined to child abuse, which I will come back to in a moment. There is a question of whether it is right to bring other criminal offences into the automatic disqualification field. One can think of other cases—extreme violence, for example. Crimes of violence are not listed here. There may be other crimes of a kind that society would regard as repugnant, but they are not listed here either. I have some doubt as to whether it is right to put the sexual offences chapter into the automatic disqualification field.

There are other reasons for being concerned about the wording. There are two chapters here. First, there is being found guilty of “a sexual offence”. There is no qualification as to how serious that offence may be. Anything that falls within the broad chapter of sexual offences would be included here, some of which may not require or justify a sentence of imprisonment at all. Then there is “the sex offenders register”. The position is that a person is placed on the sex offendering register as a matter of law if a sentence of 30 months or more is passed. So far so good: you are dealing with the more serious categories to justify being put on that register, but the initial part—conviction for “a sexual offence”—does not include everything.

There is a feature of the register that has been cured by order, but which caused concern in a case on which I sat in the Supreme Court. An 11 year-old boy who had committed a sexual offence—a very serious one, because he was sentenced to more than 30 months’ imprisonment or detention—was placed on the register. As it stood at that time, in 2010, the presence of his name on the register was without limit of time. It is an indefinite feature.

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[Lord Hodgson of Astley Abbotts]

My Lords, I was slightly surprised to see that the noble and learned Lord, Lord Hope of Craighead, was not going to rise to his feet to take us through the significant words “any serious incident”, as serious incidents obviously can be in the eye of the beholder, the second point,

“results in, or risks causing”,

which requires one to take a view of the future, which is also quite demanding, and the definition applied to “significant harm”. I wonder about the wording of this amendment, which I think would have a pretty chilling effect on trustees and might well lead to them ringing the Charity Commission with inquiries about the nature of particular incidents and whether they qualified under this quite broadly drawn clause, or indeed might lead to a rash of reports to the Charity Commission, which may or may not be a good use of the commission’s time and energy to follow up.

For my part, I go back to my wish to expect trustees to behave responsibly and for the Charity Commission to check them, but not to impose other and further duties. I drew a different conclusion from the noble Baroness about the Charity Commission’s guidance on its website, which seems to be a much better way of dealing with this than putting it into statute. The charity’s trustees would have to be aware of that guidance and follow it. I think that the noble Baroness was slightly unfair to the commission about the order in which it has rated the different offences. Just because child abuse comes a bit further down the list does not mean that it is considered less important; I do not think that is a fair conclusion to draw. It is more important that we should have flexible guidance and that the Charity Commission empower trustees. We should not impose in statute quite wide-ranging and imprecise duties that will be a further reason why people do not want to act as a trustee.

[Baroness Barker]

My Lords, I say to the noble Baroness, Lady Hayter, that I do not think anyone in this House feels that the whole matter of child abuse has been done and that there are no more protections to be had. There is a question about the extent to which we need to change the law as opposed to the extent to which we need to give advice and change practice within organisations. I rather think that large organisations, such as the BBC, and indeed small organisations, are very far from having fully worked out their response to the revelations that have come out over the past couple of years.

I, too, take the point made by the noble Lord, Lord Hodgson: I think that the order in which things appear on the Charity Commission website, to be fair to the commission—and we are not always very fair to it—is as much to do with history as with anything else. In the time of Anthony Trollope, financial misdemeanours were at the forefront of the commission’s mind, not child abuse. I really think that the climate has changed. I shall not repeat the arguments that I made about older people under the previous group, because I misread the groupings, but I take the point about the protection of vulnerable adults.

I wanted to ask the noble Baroness about her Amendment 11—and perhaps the Minister might help with the answer to this—and the power to disqualify all trustees of a charity. My understanding is that it is a basic tenet of charity law that trustees are jointly and severally liable for decisions that are made or for failures within the charity. So I am surprised to learn that trustees can be removed only as individuals. I should have thought that their joint and several liability would mean that, if something as bad as the examples given by the noble Baroness were to happen, the whole board of a trust would be equally affected by it and would therefore they would all be removed. But maybe my understanding is slightly out of date.

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[Lord Scott of Foscote]

I entirely support the amendments proposed by my noble and learned friend Lord Hope for the reasons he has given. As he said, in the Oxford dictionary there are two alternative definitions of the expression “privy to” and neither would be appropriate in this part of the Bill. On,

“sharing in the secret of a person’s plans”,

I suppose that spouses share in the secrets of the plans of their partners, but that does not make them people who ought to be subject to the provisions of this Bill. The other meaning is,

“a person having a part or an interest in an action, matter or thing”.

“Interest” is not appropriate. The substituted words suggested by my noble and learned friend—“participated in”—seem much better and should be accepted.

[Baroness Barker]

My Lords, as a member of the committee, I want to support the noble and learned Lord, Lord Hope. I love going to Hampton Court. When you go there, particularly if you are a kid, you get to understand how this term came to be. We are not in Tudor times but it is a very important matter. A number of the charities we talked to in the course of our discussions work internationally. They work in very difficult situations, such as in war situations around the world, and at times it can be quite difficult to ascertain the extent to which the trustees know what is happening in their charities.

On the last set of amendments, the noble Baroness, Lady Hayter, tried to take us to a place where we could understand the difference between management and governance. We are talking very much about governance here, not about the people who run or manage charities and are therefore close to the day-to-day activities of those charities. If the question is about the extent to which trustees in a position of governance need to know what is being done by their charities or can inadvertently be assumed to have known that something adverse happened, then that is absolutely wrong.

I am always interested in things that clarify governance for trustees. Governance is very difficult to pin down. This change of language is an attempt to help the trustees of today understand that distinction between governance and management, and that is laudable.

[Lord Watson of Invergowrie]

My Lords, I start by saying that the Opposition support these amendments as well. One of the issues arising among a number of organisations in response to the Bill is that it lacks clarity in various ways. If one of the more straightforward means of overcoming some of that lack of clarity is changing the wording as suggested here, then we should all welcome that.

The noble and learned Lord, Lord Hope, mentioned the recommendation of the Joint Committee and that the wording “aware of” was suggested. In response to the committee’s recommendations, the Government stated in their report of March this year:

“The Government will explore implementing the Committee’s recommendation to replace ‘privy to’ with ‘aware of’ with Parliamentary Counsel. The term ‘privy to’ is already widely used in the existing legislation and we want to carefully consider the implications of any change before committing to a change of wording”.

Following that consideration, the Bill was not changed and, of course, “privy to” remains in it.

The noble and learned Lord, Lord Hope, told us why he came back with amended wording. My only thought on the matter is that a former Law Lord’s understanding of the law would be something to which I would give weighty consideration—to put it mildly. Can the Minister say why, and indeed whether, Parliamentary Counsel continues to believe that that wording is right? This is a fairly straightforward change that should be made to the Bill.

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Moved by

[Baroness Barker]

5: Clause 3, page 3, leave out lines 3 to 6

[Baroness Barker]

My Lords, I shall speak also to Amendment 10. I hesitate to suggest this, but these are perhaps two of the most substantive amendments before us today. During the work of the pre-legislative scrutiny committee, it became clear that there was broad agreement that the commission should have the power to disqualify some people from being trustees. Furthermore, there was agreement that there should be an automatic power to disqualify some people from being trustees. We listened to various people from all around the sector, who agreed on many of the measures in this Bill that we might not debate in great detail, such as the power to disqualify someone who might well have evaded disqualification because they had already resigned. There was a general consensus that the commission needed more powers to disqualify unsuitable people to ensure that the reputation of individual charities, and charities as a whole, was upheld. However, we also heard that by and large trustees are overwhelmingly, for the most part, honest people who very occasionally, in rare circumstances, make mistakes, and in even rarer circumstances commit criminal acts. It was against that background that we deliberated the powers in the draft Bill.

The two elements of the draft Bill that received the widest criticism of all were the conditions under which these powers would be exercised, which are the subject of these two amendments. In Clause 3, the range of conduct to be considered by the commission when exercising its powers to disqualify includes many with which we would have no quarrel whatever, where people have been found guilty of misconduct and mismanagement. The point on which there was the most discussion and disagreement among the witnesses who came before us was Clause 9(3)(b)—that the commission could take into account not just a person’s conduct in relation to the charity of which they had already been deemed guilty of mismanagement and misconduct such that an inquiry had been opened but,

“any other conduct of that person that appears to the Commission to be damaging or likely to be damaging to public trust and confidence in charities generally or particular charities or classes of charity”.

So, any other conduct at any time or in any other circumstances. That is a very wide power, and it is one that has drawn criticism not just from bodies that exist to champion charities, such as ACEVO, but, most significantly, from the Charity Law Association working party, the body of charity lawyers who have spent a considerable amount of time working on this. The association agrees that the commission should have this power but, if it is going to have it, there needs to be clarity and transparency about how it would be exercised. Any trustee who found themselves subject to the power would then clearly understand the evidence that was being used to come to a judgment about them.

The government response to the draft report noted that the commission was already required to produce a statement of reasons under Section 86 of the Charities Act 2011, when it exercises its compliance powers, but noted that it would explore whether an amendment to the Bill was needed to make this clear. There has not been any such amendment. So in introducing this probing amendment, I wish to discuss and get on the record some of the criteria that would be used.

As the Minister said in the debate on the previous group of amendments, the Charity Commission has produced a draft policy paper on how it might use this proposed power to disqualify people. Eventually perhaps the commission could get round to sending it to those of us who were members of the Select Committee and who are discussing the Bill. It is a guidance paper that is comforting in that it makes a series of heartening statements, particularly in relation to Clause 10, but it raises a number of problems too. As the Minister said, the power to disqualify in the new sections introduced by Clause 10 comes in three parts: somebody has to have been guilty of one of the conditions labelled A to F as set out in new Section 181A(7); the person is unfit to be a trustee; and the order to disqualify somebody is desirable in the public interest in order to protect public confidence.

I cannot take exception to conditions A, C, D and E. Condition A states that,

“the person has been cautioned for a … offence against a charity or”,

in the administration of a charity, for which the conviction would be automatic disqualification. Condition C is that,

“the person has been found by Her Majesty’s Revenue and Customs not to be a fit and proper person to be a manager of a body or trust”.

Condition D states that the person was,

“a trustee … officer, agent or employee of a charity at a time when there was misconduct or mismanagement”,

and the person was responsible for, contributed to or facilitated the misconduct or mismanagement. Condition E is that an officer, employee or corporate trustee was responsible for, contributed to or facilitated misconduct or mismanagement of a charity. I do not think anyone would think that any of those would be a reason not to disbar.

The problems lie in conditions B and F. Condition B has already been the focus of some discussion and will be so again. Under that condition, which is in two parts, where a person has been convicted of an offence in another country that is against, or involves the administration of, a charity or a similar body, the person would face automatic disqualification from acting as a trustee if—this comes in the second part—the offence would have constituted a disqualifying offence if committed here. In the Charity Commission’s policy paper there is no “and” or “or”. There is no interrelationship between those two parts; they are just stated as bullet points.

I have a question for the Minister. If someone who is active in parts of the world where gay people are persecuted is found guilty in a court of law of breaking the law of that country and then comes to Britain, would they be barred from being a trustee of a charity? After all, they broke the law in their own country. If someone was found guilty in Russia of breaking the law under that country’s increasingly draconian laws against NGOs and charities, would they then be regarded in this country as ineligible to be a trustee of a charity under this provision?

By far the biggest problem with this clause is condition F, which we are seeking to delete. It states,

“that any other past or continuing conduct by the person, whether or not in relation to a charity, is damaging or likely to be damaging to public trust and confidence in charities generally or in the charities or classes of charity specified or described in the order”—

in the view of the Charity Commission. That, I rather think, drives a coach and horses through all the other conditions, because if I could not debar someone under any of the other conditions I am sure that I would go to that one.

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[Lord Bridges of Headley]

My Lords, this has been a very stimulating debate and I pay tribute to the noble Baroness, Lady Barker, for provoking it. I shall first address Amendment 5 about the proposed powers of the commission to take into consideration the conduct of a person outside a charity. I recognise that these are broad powers in that they allow the commission to take into account any outside conduct. However, these powers are necessary to enable the commission to address conduct which could seriously damage public trust and confidence in charities and need to be viewed in the context of the other criteria that apply to their use, along with the various safeguards in place.

Just as we have to place a large degree of trust in charity trustees to exercise their discretion properly in running their charities, we need to trust the Charity Commission to regulate independently and in the public interest. Of course, there is a range of safeguards, not least the independent judicial oversight provided by the Charity Tribunal, which has shown since it started work in 2008 that it is not afraid to criticise the Charity Commission in the few cases where it considers that the commission has overstepped the mark and acted disproportionately.

As I and others said on Second Reading, the Bill seeks to achieve a balance. The powers that it would confer on the Charity Commission need to be broad enough to make them useful. If they are too narrow they would be impractical and go unused—a point that my noble friend Lord Hodgson made. But charities need to know the circumstances when the powers may be used and I believe that the Bill achieves that balance.

The purpose of the noble Baroness’s first amendment would be, as we have discussed, to limit the other conduct that the Charity Commission could take into account when considering the exercise of its compliance powers. It is important that we retain this part of the clause as it prevents the undermining of public trust and confidence in charities, as all relevant—I stress “relevant”—conduct ought to be taken into consideration before the commission determines how to act accordingly. The commission could not take account of any irrelevant conduct. Indeed, I argue that the commission could be criticised for failing to act, or for taking only weak regulatory action, if it were unable to take into account relevant evidence of misconduct of an individual outside of a charity.

I shall illustrate this with an example. The Charity Commission opens an inquiry into charity A regarding concerns of financial mismanagement. It establishes misconduct and mismanagement against trustee X, an accountant, as large payments have been taken out and not accounted for. Blank cheques have also been signed by trustee X. The commission then approaches other relevant regulators which provide them with information that trustee X has had two cases of professional misconduct for accountancy irregularities in previous employment. Under Clause 3 as proposed, the commission would be able to take this other evidence into account before deciding what action it would be proportionate to take in the circumstances. If the amendment were to be accepted, the commission would be able to give no weight to this other, potentially compelling, evidence.

I emphasise that safeguards would be in place to ensure that any conduct outside of a charity would be only that which was relevant to the decision being considered by the commission. I shall illustrate those safeguards. First, there must be a statutory inquiry open and the Charity Commission must be satisfied that there is misconduct or mismanagement linked to the individual in the charity under inquiry before it can rely on any conduct from outside the charity as a makeweight in its decision-making.

Secondly, the commission, when exercising its powers, must provide a statement of reasons under Section 86 of the Charities Act 2011, which would set out the evidence it relied on in making the decision. This would include any evidence it relied on from outside the charity. No amendment to the Bill is needed to ensure that that is the case; we can amend the Explanatory Notes to make that clear.

Thirdly, as with all the Charity Commission’s compliance powers, the commission would have to be satisfied that the exercise of the power would be in line with the principles of best regulatory practice, including that it is proportionate, accountable, consistent, transparent and targeted only at cases where action is needed, as set out in Section 16 of the Charities Act 2011.

Finally, there is, of course, a right of appeal to the Charity Tribunal in relation to the exercise of the commission’s compliance and remedial powers, ensuring judicial oversight of the exercise of the relevant power.

The noble Baroness’s second amendment would remove the condition that enables the Charity Commission to consider disqualification on the basis of conduct likely to damage public trust and confidence in charities. The power to disqualify from charity trusteeship and senior management positions is indeed a significant power. As such it is important that the process is rigorous but fair, and, once again, balanced.

I shall explain what that will mean in practice. First, the individual must have met tougher new criteria to become a trustee and not be automatically disqualified in the first place. Secondly, before the commission can decide to disqualify an individual, three new conditions need to be met, as set out in the guidance issued by the Charity Commission. First, one of criteria A to F is met; secondly, the individual is considered to be unfit to be a charity trustee, defined by that guidance; and, thirdly, the commission considers it,

“desirable in the public interest in order to protect public trust and confidence”,

in charities.

The commission then has to give notice of its intention to disqualify and give a period for representations to be made before any decision is made. If a decision is made to disqualify, the disqualification could take effect only after a period of time has elapsed in which the individual can lodge an appeal with the tribunal—that is, 42 days. If the decision is appealed to the tribunal, obviously the tribunal would be able to confirm or overturn the disqualification. In making a decision, the tribunal would consider the case entirely afresh on the basis of all the evidence before it; it would not simply review the Charity Commission’s original decision. Lastly, all the commission’s actions in this process would have to abide by Section 16 of the Charities Act 2011.

As was said just a moment ago, the Joint Committee that undertook pre-legislative scrutiny agreed that there was a,

“need for a broad power to disqualify an individual in certain instances, not all of which can be specifically identified and encapsulated in legislation”.

The noble Baroness, Lady Barker, referred to one scenario and asked whether a person could be disqualified on the basis of an overseas conviction in a country where homosexuality is illegal. An overseas conviction is not enough on its own. As I have said, the commission must also be satisfied that a person is unfit to be a charity trustee and that disqualification is in the public interest to protect public trust and confidence in charity. Furthermore, the conviction must concern a charity; on its own, it would not trigger disqualification. I draw the noble Baroness’s attention to that point in the little box on page 3 of the guidance, where it talks about a,

“conviction abroad for bribery or terrorist financing in connection with a charity or similar body”,

and says that such a conviction,

“would take account of any concerns raised about any court or other legal processes, their compliance with right to a fair trial … and whether the standards of evidence and justice would not be accepted in a UK or European court”.

I think that that is all pretty relevant with regard to her scenario.

[Baroness Barker]

Before the Minister moves on, the point that I made about Russia is that it is entirely possible that someone could be prosecuted there under its new, draconian laws about NGOs. That is not far-fetched; it could well arise that someone comes to this country from Russia having been found guilty of an offence under those laws against a charity, and that person then wants to serve as a trustee of a British charity. Believe me, organisations such as Stonewall are regularly subject to challenge as to whether their activities comply with all sorts of things, which they do. So it is not a far-fetched scenario.

[Lord Bridges of Headley]

I thank the noble Baroness for that point. The power would be discretionary and on a case-by-case basis. I refer her to test 3, which says that a,

“disqualification must be desirable in the public interest in order to protect public trust and confidence”.

It goes on to say that that the,

“test will, for example, allow the commission the flexibility to take account of circumstances in which the risk of (further) damage to charity is minimal and it would not be in the public interest to act against the individual”.

I am happy to write to the noble Baroness and illustrate this issue further, as she makes a good point.

As I was saying, condition F is a comparatively broad criterion, but we consider it necessary to enable the Charity Commission to address conduct that could seriously damage public trust and confidence in charities but which would not be caught by one of the other criteria. The condition needs to be considered in context of the other limbs of the exercise of the disqualification power—those that I have just described: fitness, and that disqualification is desirable in the public interest to protect public trust and confidence in charities—and the safeguards relating to the operation of the power, including the right of appeal to the Charity Tribunal.

--- Later in debate ---

The disqualification power may appear to be broad, but is not so when considered in the context of the other requirements of the disqualification provision, and the commission has been clear that it will be narrow in its application. I repeat the point I made earlier about the need for powers in the Bill to be usable by the Charity Commission: if we attempt to so narrowly draw criteria for the regulator’s intervention, we will end up with powers that would go unused and abuse that would go unaddressed, and we may find ourselves back in a few years’ time having this debate all over again. We have to trust in the regulator to use these powers proportionately and in a targeted way. On that basis, I hope that the noble Baroness will be persuaded to withdraw the amendment.

[Baroness Barker]

My Lords, I thank the Minister for his comprehensive and considered response. I say to other noble Lords that this is Committee and these were probing amendments. Although I am rather glad that we have had this discussion, I am not sure that we have satisfactorily answered the point.

I say to the Minister that I understand why lawyers, particularly charity lawyers, wish to have powers that are broad and can be used in a number of different circumstances. However, when those powers are as broad as they are in the Bill, they do not help individuals to understand their fitness to serve as a trustee. Part of the law must be about enabling those who use it to know what it means. It would have been possible, had the Government been so minded, to have addressed this problem in a different way, particularly on the matter of fitness or unfitness. They could have heeded the advice given to us by the Charity Law Association about the list of matters and criteria that could be taken into account, such as the Company Directors Disqualification Act, which has a long list of factors, which would enable somebody to know the criteria that would be used to determine whether they are fit.

On the reliance on the tribunal, in the Joint Committee debates there was a level of agreement that the tribunal works perhaps far better than anticipated by those who took part in the painful process of debating the legislation that set it up. However, I say to the Minister that, as it stands at the moment, it is only when there has been an order to disqualify and that matter has come before the tribunal that anybody will be in a position to make an independent assessment of whether the commission is acting correctly and proportionately. By that time, a person will find themselves on the end of a potential disqualification which could have a profound impact on not just their involvement as a trustee but their professional life, too.

These provisions are way too wide. They do not serve the purpose of explaining matters to people who may wish to put themselves forward as trustees but who would be so unsuitable that they would be disqualified. It does not help charities to have this lack of clarity about who they should or should not have on their trustee boards. This is a matter to which I think we may return at a later stage but for the moment I thank noble Lords for their contributions and beg leave to withdraw the amendment.

Amendment 5 withdrawn.