Charities (Protection and Social Investment) Bill [HL]

Baroness Barker Excerpts

Monday 29th June 2015 Grand Committee

Moved by

[Baroness Barker]

8: Clause 9, page 8, leave out lines 26 and 27

[Baroness Barker (LD)]

My Lords, Clause 9, which gives the power automatically to disqualify somebody from being a trustee, was the subject of perhaps one of the most contentious of the joint scrutiny committee’s discussions. It was certainly the point on which we received the greatest variety of opinion and which led to some of the most intense arguments from a range of witnesses.

I think that there was general agreement that there are some crimes which are of such seriousness that they should lead to automatic disqualification and that no charity would wish to have somebody who committed them serving as a trustee. We are talking about someone who had been found guilty of crimes of the order set out in Clause 9; for example, making false disclosures and false statements, and disobedience to a direction of the commission on an application to the High Court.

However, the discussion which really brought home the disquiet in the sector was on whether terrorism offences should be a cause for automatic disqualification. Part of the reason why many people in the sector have sought to question these provisions in the Bill, when you might have expected them simply to agree, is some of the past views of the Charity Commission and the way in which they have been expressed. In October 2013 and in early 2014, the current chair of the Charity Commission made statements about the biggest threat to British charities being terrorism. That was a major assertion to make. At that time and since then, there was and has been little evidence of abuse of British charities by terrorist organisations.

The particular problem with those statements was that the Charity Commission chose to make them during Ramadan, which is the biggest charitable fundraising period for Muslim charities. That caused needless and great offence, and the back-draught has coloured people’s vision or view of the power which is now to be given the Charity Commission in Clause 9. That said, there is agreement across the board that there needs to be a tightening up of the grounds on which people can be disbarred.

However, lying in the middle of the clause is the regulation-making power for the Minister—it is the Minister for the Cabinet Office, not the Home Secretary, I note—to add by regulation to the list of offences for which one can automatically be disqualified from being a trustee.

We heard a wide range of views from the witnesses to whom we talked, from the commission being of the view that the provision was necessary for its regulatory functions through to organisations such as ACEVO, which felt that, on balance, the power should be on the statute book but was not likely to feature large in the life of most charities. None the less, there was across the board a sense that charities were being unfairly targeted by the Government, without much evidence that they should be, and that the provisions which relate to terrorism offences are very wide.

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[Lord Bridges of Headley]

My Lords, I am grateful to the noble Baroness, Lady Barker, for her explanation of this amendment, which was typically reasonable and eloquent. Subsection (4) of new Section 178A, inserted by Clause 9, would enable the Minister by affirmative procedure to make regulations to amend the list of criteria for automatic disqualification by adding or removing an offence.

The Joint Committee that undertook pre-legislative scrutiny of the draft Bill recommended that there be a requirement for any such regulations to be consulted on. The Government agreed and made provision, in subsection (21) of Clause 9, for there to be a requirement to consult on draft regulations where they add an offence.

The Delegated Powers and Regulatory Reform Committee’s first report of this Session stated that the committee was satisfied with the delegation and level of scrutiny in relation to this power when it had advised the Joint Committee on the Draft Protection of Charities Bill. It recognised that the Cabinet Office may in future need to take urgent steps to specify offences that should result in automatic disqualification, and considered that the affirmative resolution procedure would provide an appropriate safeguard.

The DPRRC, however, has raised a question about the commencement of new Section 178A and any regulations made under it. The last Government’s response to the Joint Committee’s report on the draft protection of charities Bill stated that we,

“commit to ensuring that sufficient time would be allowed before the commencement of such provisions”.

I will, therefore, happily provide a commitment to your Lordships that a disqualification would not take place under new Section 178A in relation to a person previously convicted of a specified offence until at least two months after enactment of the section and, in all but exceptional circumstances, until at least two months after the date that any regulations are made under subsection (4). We would want to ensure there was sufficient time to notify charities of the new offences.

When the Bill becomes law, we will publish an implementation plan that will set out when the different provisions of the Bill will be commenced. This will include the timetable for commencement of the automatic disqualification provisions under new Section 178A. The Charity Commission has said that it is planning a wide-ranging communications strategy in order to give those affected by automatic disqualification a fair opportunity to learn of the relevant changes before they come into force. Where we undertake any consultation, we will ensure that it is compliant with the compact.

I know that the Lords Constitution Committee has also considered the power to add offences. Its second report of this current Session states that this power to add new offences is not explicitly constrained in its scope, so perhaps I can provide some assurances to your Lordships on how the power would be used, and address a number of the points made.

First, while it may be considered unnecessary, I should nevertheless point out that there are no plans to exercise the power. Its purpose is to enable Ministers in future to amend the list of offences as new criminal offences are created which may be identified as appropriate for automatic disqualification, or criminal offences currently listed may no longer be appropriate, meaning the list needs to be updated. The prospect of a power to amend the list of offences was raised in consultation last year and was generally well supported by respondents, provided the power is subject to the affirmative procedure.

It should go without saying that, in considering any new offence to add to the list, there would need to be a clear rationale for adding that particular offence. The offence would have to be relevant to a person’s fitness to act as a trustee. We would set that out in consulting on the addition of any new offence. That consultation is a statutory requirement. Of course, the safeguards of the public consultation and the affirmative resolution procedure in Parliament—a point my noble friend Lord Hodgson of Astley Abbotts raised—should also provide a significant measure of assurance.

I hope that I have been able to give sufficient assurances to your Lordships on how this power would be used, and invite the noble Baroness to withdraw her amendment.

[Baroness Barker]

My Lords, I thank the Minister for that characteristically considered answer. It was helpful to have this fleshed out and to have statements on the record from the Dispatch Box.

As I tried to indicate in my opening remarks, and as the noble and learned Lord, Lord Hope of Craighead, indicated on behalf of the committee, there is a widespread understanding in the sector that this is necessary. There is not such a widespread understanding, but perhaps some relief, that some charities may be able to use the provisions of this clause to deter unsuitable people from becoming trustees. That may well be a good thing. It is simply that, within the current climate and context of the debate about the nature of terrorism legislation and its ever-widening grip on our lives, those of us in opposition are beholden to pressure the Government on these matters to make sure that we are not being unduly punitive towards individuals for all the wrong reasons.

I therefore take the Minister’s explanations and I listened to what he said about the extent to which there will be public consultation. With that in mind, I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

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[Lord Hodgson of Astley Abbotts]

My Lords, having also been a member of the Joint Committee, I support the need for flexibility on this. I used the example at Second Reading of the Yazidi women who have been enslaved by ISIS and whom it is allegedly possible to ransom for $10,000. Clearly that money is going if not directly then indirectly to ISIS and these charities are faced with an incredibly difficult decision. On the one hand, morality drives you towards wishing to rescue these wretched women who are in a state of sexual slavery. On the other, there is the danger that if you do it, you may end up being prosecuted for the reasons that we have been discussing. I support the need to find some way through this thicket. Whether it is a DPP statement of guidelines or whatever else, I do not know, but we should not let it just ride through our Committee without having a real go at getting clarity as to how charities can operate, not only for the benefit of the individuals concerned but for the reputation of this country. Our soft-power reputation for making an important contribution to providing humanitarian aid in various parts of the world is important to us, and we need to spend time making sure that we maintain it.

[Baroness Barker]

My Lords, it is worth noting that this issue is not new. Anybody who can remember the 1970s knows that similar decisions had to be made then about whether charities raising money for organisations in Ireland were legitimate charities. I go back to the point raised by the noble and learned Lord, Lord Hope of Craighead, when he talked about reasonable excuse. If a charity is raising money in pursuit of its charitable objects, the question becomes how it pursues its charitable objects, not whether it is therefore deemed to be supporting terrorism. The Charity Commission, having raised the temperature around this issue, is under an obligation to work with the sector to come up with the guidance for charities, which is obviously necessary, on how they can pursue their legitimate charitable objects in the difficult parts of the world in which they have to work. This is not new, and it is not beyond the Charity Commission to facilitate an answer.

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[Lord Hodgson of Astley Abbotts]

That is absolutely right. The noble Baroness did say that, but her amendment says, “All fundraising charities”. I know she slightly shifted the ground in the middle of her speech, and I accept that.

What, then, is the problem? There is reluctance in the sector to accept that every problem is everybody’s problem. There is a tendency to push the pea round the plate and to blame another sector, so the chuggers in the street blame the telephone collectors, who blame the direct mail people, and so on. They say, “It’s not our problem—it’s somebody else’s”. There is also reputational pride in individual charities: “We don’t do that sort of thing—other people do that”. Therefore there is a real need for the sector to understand that it is judged by the weakest link, and unless it takes steps to remedy it, the sorts of results the noble Baroness talked about will occur.

Secondly, there is a failure to see that the alphabet soup of regulatory bodies—the IoF, FRSB, the PFRA and the Charity Retail Association—is confusing to the public. They often appear to be acting quite separately; the FRSB’s report on Mrs Cooke said:

“Fundamentally, the FRSB Board believes that the IOF Code must be strengthened”,

as if they are completely separate organisations, way away from each other. It seems much neater to collaborate and work closely together.

There are three things that we should encourage the sector to do. The public need a single point of entry into the system—whether they wish to approach it by phone, by email or by letter—by which complaints or concerns can be addressed. All the bodies involved in charity fundraising regulation and all charities need to pool their sovereignty into a single charity self-regulating organisation, called, say, the charity fundraising authority. That would be tasked with producing national guidelines and model rules with which local authorities should comply. If they do not comply they should explain why they are not complying. They should also provide internal best practice rules for fundraising, in particular about things like passing on names of donors to other charities, because the Olive Cooke case was about the pressure built up by repeated approaches from charities. The Government need to oversee this, either directly or through the Charity Commission.

This will be a challenge to the sector, which has not found it easy to accept change and responsibility for one another. I accept and agree that the situation is not satisfactory and action needs to be taken, but I wish good luck to whoever takes it on and suggest that they pack a tin hat.

[Baroness Barker]

My Lords, I agree to a certain extent with what the noble Lord, Lord Hodgson, said. He has wrestled with this particular issue for the best part of six years now and he bears some of the scars accordingly. There is no doubt that the voluntary and charitable sector is acutely aware that this particular case has raised this matter to a point where it can no longer be ignored or shunted around between different bodies. Some noble Lords were present at a national event held by the NCVO two weeks ago, at which Sir Stuart Etherington stated in terms to the great and the good of the voluntary sector there assembled that they cannot dodge this issue anymore and that the voluntary sector has to come up with some strong self-regulation. If it does not, it will find itself on the receiving end of regulation from government.

It really is quite tough for the voluntary sector to do that, not least because the noble Lord, Lord Hodgson, is right: there are completely different types of organisations doing different things in different ways, which are all subsumed under the catch-all of “fundraising”. It is sometimes the bigger organisations—the multimillion pound organisations—that have the resources with which to emulate practice in the private sector, which is sometimes pressurised but which actually works. That is the problem: emotional appeals and pressure work.

Equally, very small charities that work locally and in a face-to-face way, raising small amounts, quite often have a higher level of ethical practice because they have to: they work in communities where, if they work even remotely unethically, they do not raise money. There are then those charities that operate in the middle, which sometimes are some of the most innovative organisations of all but which would be the ones that would fall foul of regulatory requirements, just because they do not have vast teams of people overseeing their compliance.

A fundamental problem for charities is that when they are open and transparent about their fundraising costs, they put themselves in the firing line for all sorts of comment. It makes them incredibly reluctant to do that—not because they want to deceive anybody but because the very same people who have taken it upon themselves, quite rightly, to criticise in cases such as this take the charities to task for doing that. You cannot run a compliant, ethical and effective fundraising operation on thin air. You cannot do it.

The noble Baroness is right to do her bit to up the temperature on the voluntary sector at this moment, but I am not sure she is absolutely right with the amendment that she has put forward. I believe that the voluntary sector should be allowed one last chance in the last chance saloon to put itself right. The noble Lord, Lord Hodgson, is also right that there are too many different bodies all hovering around the same thing, clogging up the decision-making, and there needs to be a rationalisation of that. I would suggest that there should be a time limit, say of a year. If the voluntary sector does not come forward with a new code of conduct within that year, the Government would be absolutely right to step in at that point and exercise their powers.

[Lord Bridges of Headley]

My Lords, we are all understandably concerned about the reports of the fundraising activities used by a small number of charities. There is certainly no complacency on behalf of the Government on this issue; the debate and the possible disagreement are over what should be done. I hope, as the noble Baroness, Lady Barker, just said, that the self-regulatory bodies note the fact that everyone wants action to be taken and to be taken soon.

Last week my honourable friend from the other place, the Minister for Civil Society, Rob Wilson, addressed fundraisers and made it clear that the clock is ticking for them to get a grip on self-regulation. He said:

“I am giving self­regulation an opportunity to demonstrate it can work effectively and make the short term and long term reforms necessary. I urge you to take that window of opportunity seriously as the window may not remain open for much longer … Change is essential. You should embrace it and lead it, rather than wait and allow others to do it for you”.

The noble Baroness, Lady Hayter, cited a report in the Daily Telegraph. The Daily Telegraph is obviously a fantastic newspaper but I would not believe everything that I read in it. I am not sure where that particular date has come from, but I should stress that, as I have said, self-regulatory bodies have a relatively short opportunity to demonstrate that they are getting to grips with self-regulation.

It has been less than two months since poor fundraising practices were thrust into the media spotlight following the sad and tragic death of Olive Cooke. The extent to which she was influenced by poor fundraising practices is not entirely clear, but the issue, as the noble Baroness so rightly said, has clearly struck a chord with the public. Since then there has been a steady stream of media reports about unacceptable fundraising practices—whether direct mail, telephone fundraising or door-to-door fundraising.

As I said, I think almost everyone agrees that there needs to be change. The question is what change and who should lead it. It strikes me that there are three questions that need answering: first, whether the standards fundraisers have set themselves are high enough; secondly, whether the structures for self-regulation are the right ones; and thirdly, whether fundraisers and the charity trustees who oversee them accept the need for change to ensure that donors are treated with honesty, respect and decency.

On the first question, whether the standards for fundraisers are high enough, the answer is a clear no in relation to some fundraising practices. That is why the Minister for Civil Society met the regulators at the beginning of June and set them a challenge to improve standards in a number of areas. This work is continuing but it must bear fruit.

I welcome the announcement by the Institute of Fundraising, on 24 June, that it is strengthening its code of fundraising practice by requiring door-to-door fundraisers not to knock on doors that have a “no cold calling” sticker. However, that is something it should have done proactively some time ago. I know that several review groups have been established and are looking at various issues, including options for opt-in and opt-out, frequency of contact, and whether there can be a one-stop shop for people who want to come off all fundraising contact lists.

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[Lord Hodgson of Astley Abbotts]

The danger about moving as the noble Baroness says is that when in two years from now there is a charge from the Government for regulating the sector, there will be an enormous outcry, so what looks attractive to begin with will be inflexible, expensive and even more unpopular than the present system. It would be better from every point of view, accepting all the points about vulnerable people, if the sector could be persuaded to take up the challenge, find the will, find the money and make it happen, because it will make it happen in an effective way. The problem at the moment is that it has not really accepted that there is a fundamental problem and thinks that if there is a problem, it is not its problem but somebody else’s.

[Baroness Barker]

My Lords, I would like to follow that up by saying that I think that the noble Baroness, Lady Hayter, is absolutely right that one of the big issues—in this field in particular, but it is a big issue right across our society that we have not got to grips with—is how we will include people with dementia in all sorts of aspects of our life. This is true in terms of the NHS, and social care, and here.

The voluntary sector ought to be the one place in our society where we can go and talk to the Alzheimer’s Society and ask what a proper code of conduct and practice might look like. It is self-evident from what the noble Baroness, Lady Hayter, said, that the commercial sector has not got this right yet. Organisations such as banks are the bodies in our society that should be at the forefront of dealing with transactions with individuals, even more than government. Banks have millions of transactions every day with millions of individuals, including older people. They clearly have not got it right. We should have one go in our sector at getting it right for everybody else. If that does not work, then by all means go down the route that the noble Baroness wants to go.

[Baroness Hayter of Kentish Town]

It is clear that the distance between us is very small. My worry concerns the idea that we will not have another charity Bill in this Parliament. If I had an absolute commitment that we would have another Bill in two years’ time, so that if we had not done it we could do it then, that would be fine, but my fear is that this will be the only such Bill and this is the chance that we should take.

Having said that, I agree with a lot of what the Minister said. In terms of his plea—or threat; I do not know—to trustees to take a more active interest in this, his words were well chosen. The words from the noble Lord, Lord Hodgson, on a single point of entry were very good, too. However, there must be some way of overseeing that it happens. Even if the noble Lord, Lord Hodgson, does not want to come back with a suggestion on Report, we will try to see whether there is a way that puts an extra little voomph—sorry, Hansard—behind this, so that we do not have to wait. The real problem is that we had to wait for Olive to know that this was going on. That showed the Fundraising Standards Board that it was not just a matter of standards but a matter of enforcement. One disagreement that I have with the noble Lord, Lord Hodgson, is when he says that it will be very expensive. I think that some money must be spent on this, because the Fundraising Standards Board, even if it is still self-regulated, must do some monitoring, and that always costs money. If we do not do that, the long-term problem will be that we no longer have this very precious sector, which I think all of us agree is one of the great prides of this country.

Having said that, we will seek a way to come back that gets maximum support. For the moment, I beg leave to withdraw the amendment.