Royal Albert Hall Bill [HL]

Baroness Barker Excerpts

Thursday 19th October 2023 Lords Chamber

[Baroness Barker (LD)]

My Lords, I too thank the noble Lord, Lord Harrington, for the clear way in which he introduced the Bill today. I also thank him for taking the time to talk with me yesterday about it. After I met him, I subsequently went off and did what I should have done from the very start of my preparation: I went to look at the annual report, not of the Royal Albert Hall charity, which somebody going to the Charity Commission would automatically do, but of the Corporation of the Hall of Arts and Sciences, which is the charitable body that we are talking about. On doing so, you can see how our Victorian forefathers have given us a problem of a really difficult technical nature. However, through the discussion that we have had in this debate, the issues are becoming quite clear and simple. This is about a fundamental flaw in the structure of the organisation, which runs counter to the basic precepts of charity law. That is what is happening today and what we must address.

It is a frustrating moment for Members of this House. We do this sort of legislation rather well, and we cannot give it our best shot on this occasion because those of us such as the noble Lord, Lord Hodgson, and the noble and learned Lord, Lord Etherton, who have looked at this issue over several years, will not be able to take part in the Opposed Bill Committee because that body must come to the matter in a state of complete neutrality. All we can do is to do as we have today: to set out the issues as we understand them as clearly as we can and to hope that members of that committee will note what we say. I would also advise them—if I were able to, but I am not—to go back and look at the accounts and the annual reports of not just the Hall of Arts and Sciences but its related companies. I will come back to that point later in my speech.

Annual reports and accounts of charities are always fascinating—I am sorry: I am a person whose happy place is the Charity Commission register. If you look at a charity’s accounts, they always tell you not just the bare, legal things you need to know but an awful lot about what is going on there by the way they are written and what they say and do not. I hand it to the trustees: their report is full, their explanation is detailed, they have a clear exposition of the governance, and they talk about the existence and the operation of their many committees. They have a standing conflicts committee—does that not speak volumes? They also have a governance and ethics committee. The problem is not that they do not have them—they clearly pay a lot of attention to what are almost unique problems—but that those committees are all filled by people for whom the conflict of interest is that of their personal benefit versus the charitable interest.

Looking at the report and listening to the debate, there are three key points on this. One was made by the noble Baroness, Lady Stowell, on the dual role of seat-holders as members of the council and therefore as trustees. I think that it is impossible to do that dual role: when you are a trustee of a charity, you are duty-bound by charity law to make decisions in the best interest of the charity. It is impossible for somebody who is a seat-holder to do that without simultaneously making decisions that have a direct benefit on what may be their business. The noble Baroness said that she had no interest in harming or damaging legitimate businesses and assets which people hold in any way, but the point is that those businesses exist entirely within the charity—physically within it. It is impossible to separate decisions from one entity to the other. Therefore, what I understood to be the second point was that the Charity Commission was trying to find a way to unpick or analyse that conflict of interest in terms of decision-making and benefit. If noble Lords go back and look at this report, which covers the period for 2022, they will see that the charity has made minuscule attempts to deal with some of the criticisms: it has put in one independent person as chair of a committee, and the chair of the council no longer has to be a seat-holder. It is very small and grudging, but it ought to be an indicator of hope to those people who have toiled in the trenches for some time trying to raise this issue that it is possible to bring about some influence.

The second thing that emerges from the accounts is that the purpose of the Bill is unclear. There is a long section in which the charity talks about that. It says that it is a small piece of legislation whose purpose is, as the noble Lord, Lord Harrington, put it earlier, to deal with small issues such as enabling the organisation to generate capital. But we are potentially making a long-term decision about the revenue-generating capacity not just of the charity but of those businesses.

The final thing I would say on this is that the nature of the accounts and the annual report is such that it tells us one clear thing: we cannot make an informed decision on this matter. That was eloquently brought out by the question from the noble Lord, Lord Winston, which nobody can answer: how much money is made by those private seat-holders—businesses, charities, whatever they are? The accounts are incomplete.

It is technically true that those are separate businesses and therefore do not fall within the charity’s accounts, but, as the noble and learned Lord, Lord Etherton, and the noble Baronesses said, many arts charities have operating subsidiary companies that are purely commercial arms and whose profits are covenanted back to the original charity. Many large arts organisations could not exist without those commercial entities generating income for them. The crucial difference is that there is transparent accounting between the two entities and it is always possible to see how the commercial entity and the charity work together, not least so that the charities can demonstrate that they are not doing something they are not allowed to do under charity law, which is to make investments that are beneficial to their trading arms but harmful to the charity. It is not possible to determine that from these accounts.

Yet these accounts mention the other trading companies: the Royal Albert Hall Developments Ltd, which is a separate company, and Royal Albert Hall Concerts Ltd. It is absolutely reasonable that a large charitable entity should seek to contain some of its potential losses and risks by forming separate companies, but there must be clear accountability between the two.

The Bill is a flawed in many ways. It certainly does not address the key issue we have raised. Nor does it do something quite important, which is to help the trustees of the charity counteract assertions that they are not acting with full probity. They might be, but we do not know, and we will never know. The fundamental point, for me, having sat with lots of wet towels around my head as I worked my way through all of it, is that the Bill’s key purpose is the creation of those extra seats, which will in the long term, putting to one side the need to generate capital redevelopment, generate revenue. In permitting that, are we benefiting the charitable purposes of this organisation or are we merely opening up further business opportunities for the businesses that exist within its shell? Unless and until we can answer that correctly and definitively, we ought to say to the trustees that they should not do that.

My final point is on a matter that is not peculiar to this organisation or this case. The role of the Attorney-General in frustrating the Charity Commission’s ability to refer matters to the charity tribunal is a matter of ongoing concern. Those of us who took part in the review of charity law said so at the time. That matter certainly will not be resolved by this Bill, but it is one of the outstanding big issues in charity law that we need to seize on and address.

--- Later in debate ---

[Lord Parkinson of Whitley Bay (Con)]

Thanks to increases from the National Lottery as well, the Arts Council is spending £30 million a year additionally in this portfolio than in the last. The challenges of inflation certainly do beset many cultural institutions, and I speak to them about it, but I did want to correct what the noble Viscount said there.

More pertinently, the noble Viscount mentioned the decisions by previous Attorneys-General not to refer the matter to the tribunal. I cannot speak for decisions made by previous Attorneys-General, but the Attorney-General, as parens patriae, is the constitutional defender of charity and charitable property. She is required to prepare a report for the other place on certain private Bills affecting charitable interests. If she is asked to report on this Bill in another place, she will of course make her views known.

My noble friend Lady Stowell of Beeston and others referred to the loan which the Royal Albert Hall got through the unprecedented culture recovery fund. That £1.5 billion of funding provided assistance to more than 5,000 cultural institutions across the country during the challenging period of the pandemic. It was emergency support to help them through those difficult months, and no conditions were imposed upon it other than to make sure that where there were loans, they would be repaid. It was not designed as an instrument of wider policy, but as an instrument of assistance to organisations that needed it.

Other noble Lords have—

[Baroness Barker (LD)]

I wonder whether the Minister would agree with me on this point. All that he said about that loan is absolutely true, and the loan is repayable, I believe, at 2%. Does he not understand the point that some of us are trying to make that, for a member of the council of the Royal Albert Hall, which has to take decisions about the repayment of that loan, it is also possible for that same person to be the owner of a business which is conducted within the Royal Albert Hall, and that therefore they might well take the view that paying back to the Government at a low rate of 2% is better than having to pay back other loans at a higher rate? Therefore, what is actually happening is that something that was proposed for a particular public institution is actually benefiting private companies in a way that was not envisaged.

[Lord Parkinson of Whitley Bay (Con)]

The cultural recovery fund assisted more than 5,000 organisations across the country of different sizes, constitutions and setups. Some were given grants, while others were given loans, as the noble Baroness said, at a favourable rate to try to assist them at a time when the pandemic made the running of those businesses difficult. Where there are loans, the Government are clear that they must be repaid, but it is for institutions to make the decisions about how they run themselves in the light of that.

Noble Lords took the opportunity to raise a number of broader issues, which I am sure my noble friend Lord Harrington will want to reflect on when he concludes in a moment. Indeed, he may wish to reflect on them as the Bill proceeds to the Private Bill Committee.

Online Safety Bill

Baroness Barker Excerpts

Committee stage
Thursday 22nd June 2023 Lords Chamber

[Lord Knight of Weymouth (Lab)]

My Lords, my noble friend Lord Stevenson, who tabled this amendment, unfortunately cannot be with us today as he is off somewhere drinking sherry, I hope.

This is an important set of amendments about researchers’ access to data. As I have previously said to the Committee, we need to ensure that Ofcom has the opportunity to be as trusted as possible in doing its job, so that we can give it as much flexibility as we can, and so that it can deal with a rapidly changing environment. As I have also said on more than one occasion, in my mind, that trust is built by the independence of Ofcom from Secretary of State powers; the ongoing and post-legislative scrutiny of Parliament, which is not something that we can deal with in this Bill; and, finally, transparency—and this group of amendments goes to that very important issue.

The lead amendment in this group, Amendment 230 in my noble friend Lord Stevenson’s name, seeks to accelerate the process relating to Ofcom’s report on researchers’ access to information. Instead of simply requiring a report within two years of Clause 146 being brought into force, this amendment would require an interim report within three months with a final report to follow two years later. Although it is the lead amendment in the group, I do not think it is the more significant because, in the end, it does not do much about the fundamental problem that we want to deal with in this group, which is the need to do better than just having a report. We need to ensure that there really is access by independent reporters.

Amendments 233 and 234 are, I think, of more significance. These proposed new clauses would assist independent researchers in accessing information and data from providers of regulated services. Amendment 233 would allow Ofcom itself to appoint researchers to undertake a variety of research. Amendment 234 would require Ofcom to issue a code of practice on researchers’ access to data; again, this is important so that the practical and legal difficulties for both researchers and service providers can be overcome though negotiation and consultation by Ofcom. Amendment 233A from the noble Lord, Lord Allan, which I am sure he will speak to in a moment, is helpful in clarifying that no data protection breach would be incurred by allowing the research access.

In many ways, there is not a huge amount more to say. When Melanie Dawes, the head of Ofcom, appeared before the Joint Committee on 1 November 2021—all that time ago—she said that

“tightening up the requirement to work with external researchers would be a good thing in the Bill”.

It is therefore a disappointment that, when the Bill was finally published after the Joint Committee’s consideration of the draft, there was not something more significant and more weighty than just a report. That is what we are trying to address, particularly now that we see, as an example, that Twitter is charging more than £30,000 a month for researchers’ access. That is quite a substantial rate in order for researchers to be able to do their work in respect of that platform. Others are restricting or obscuring some of the information that people want to be able to see.

This is a vital set of measures if this Bill is to be effective. These amendments go a long way towards where we want to get to on this; for the reasons I have set out around ensuring that there is transparency, they are vital. We know from the work of Frances Haugen that the platforms themselves are doing this research. We need that out in the open, we need Ofcom to be able to see it through independent researchers and we need others to be able to see it so that Parliament and others can continue to hold these platforms to account. Given that the Minister is in such a positive mood, I look forward to his positive response.

[The Deputy Chairman of Committees (Baroness Barker) (LD)]

My Lords, I must advise the Committee that if Amendment 230 is agreed to then I cannot call Amendment 231 because of pre-emption.

[Lord Allan of Hallam (LD)]

My Lords, we are reaching the end of our Committee debates, but I am pleased that we have some time to explore these important questions raised by the noble Lord, Lord Knight of Weymouth.

I have an academic friend who studies the internet. When asked to produce definitive answers about how the internet is impacting on politics, he politely suggests that it may be a little too soon to say, as the community is still trying to understand the full impact of television on politics. We are rightly impatient for more immediate answers to questions around how the services regulated by this Bill affect people. For that to happen, we need research to be carried out.

A significant amount of research is already being done within the companies themselves—both more formal research, often done in partnership with academics, and more quick-fix commercial analyses where the companies do their own studies of the data. These studies sometimes see the light of day through publication or quite often through leaks; as the noble Lord, Lord Knight, has referred to, it is not uncommon for employees to decide to put research into the public domain. However, I suggest that this is a very uneven and suboptimal way for us to get to grips with the impact on services. The public interest lies in there being a much more rigorous and independent body of research work, which, rightly, these amendments collectively seek to promote.

The key issues that we need to address head-on, if we are actively to promote more research, lie within the data protection area. That has motivated my Amendment 233A—I will explain the logic of it shortly—and is the reason why I strongly support Amendment 234.

A certain amount of research can be done without any access to personal data, bringing together aggregated statistics of what is happening on platforms, but the reality is that many of the most interesting research questions inevitably bring us into areas where data protection must be considered. For example, looking at how certain forms of content might radicalise people will involve looking at what individual users are producing and consuming and the relationships between them. There is no way of doing without it for most of the interesting questions around the harms we are looking at. If you want to know whether exposure to content A or content B led to a harm, there is no way to do that research without looking at the individual and the specifics.

There is a broad literature on how anonymisation and pseudonymisation techniques can be used to try to make those datasets a little safer. However, even if the data can be made safe from a technical point of view, that still leaves us with significant ethical questions about carrying out research on people who would not necessarily consent to it and may well disagree with the motivation behind the sorts of questions we may ask. We may want to see how misinformation affects people and steers them in a bad direction; that is our judgment, but the judgment of the people who use those services and consume that information may well be that they are entirely happy and there is no way on earth that they would consent to be studied by us for something that they perceive to be against their interests.

Those are real ethical questions that have to be asked by any researcher looking at this area. That is what we are trying to get to in the amendments—whether we can create an environment with that balance of equity between the individual, who would normally be required to give consent to any use of their data, and the public interest. We may determine that, for example, understanding vaccine misinformation is sufficiently important that we will override that individual’s normal right to choose whether to participate in the research programme.

My Amendment 233A is to Amendment 233, which rightly says that Ofcom may be in a position to say that, for example, vaccine misinformation is in the overriding public interest and we need research into it. If it decides to do that and the platforms transfer data to those independent researchers, because we have said in the amendment that they must, the last thing we want is for the platforms to feel that, if there is any problem further down the track, there will be comeback on them. That would be against the principle of natural justice, given that they have been instructed to hand the data over, and could also act as a barrier.

Dormant Assets Bill [HL]

Baroness Barker Excerpts

Consideration of Commons amendments
Wednesday 9th February 2022 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

My Lords, with the leave of the House, I will move that the House do agree with the Commons in their Amendments 1 to 4. In doing so, I will briefly summarise the changes which have been made to the Bill since last it was before your Lordships’ House. All of the amendments which have been made were brought forward by Her Majesty’s Government and garnered support across all parties in another place. Commons Amendment 1 is minor and technical, responding to a drafting issue that was helpfully highlighted by the Investment Association in its written evidence to the Public Bill Committee. Amendments 2 and 3 respond to the lengthy debates on how dormant assets money should best be spent, and specifically the calls to establish a community wealth fund. Amendment 4 is wholly procedural and removes the privilege amendment made in your Lordships’ House, as is the procedure in these cases.

First, I will speak to Amendment 1. This is a minor and technical government amendment which is required to uphold the key principle of full restitution: to ensure that people can reclaim the amount owed had the transfer to the scheme not happened. This amendment clarifies that money derived from collective scheme investments cannot be transferred into the scheme as client money. This is in response to feedback we received from the Investment Association during the passage of the Bill, and we thank it for its helpful feedback on this issue.

Without this amendment, there would be an unintended loophole where ISA fund managers and investment platforms that hold collective scheme investments, and are able to convert them to cash, would be able to transfer this money into the dormant assets scheme under client money clauses. The investment and wealth management clauses of the Bill recognise the fluctuating market value of investments by entitling owners of dormant collective scheme investments to reclaim the value of the share or unit at the point of reclaim. In contrast, the right to reclaim under client money clauses does not account for the market value, as the asset is already held in cash. We believe that this applies to a small number of cases. However, if relevant institutions have the contractual cover to sell the asset on behalf of its owner and transfer the funds to the scheme as client money, this would mean that the owner would be treated differently from if their dormant asset had been transferred under the investment and wealth management clauses. Remedying this discrepancy protects the vital principle of the scheme: full restitution. It ensures that the collective scheme investments are excluded from the client money clauses, so that the owners of these dormant assets will not be treated differently depending on which type of investment institution happened to hold it for them. Unfortunately, this will have the effect of excluding collective scheme investments held by investment platforms and ISA fund managers from the scheme at this time. Bringing them into scope would require complex technical work, and we are working with the industry to understand if and how this can be accomplished in future under the power to extend the scheme through regulations. We thank our industry partners again for their thoughtful and very helpful feedback on this issue.

I now turn to Amendments 2 and 3. As noble Lords know, a key topic of debate throughout the passage of the Bill has been the proposal to use dormant assets funding to establish community wealth funds in England. We have heard, both here and in the other place, the merits of considering this model, not least from the former Bishop of Newcastle before she left your Lordships’ House. This is a model whereby left-behind communities are empowered to make their own decisions on how best to develop vital social infrastructure in their local areas. This kind of devolved and very local decision-making is, of course, a key tenet of the Government’s levelling-up White Paper, which was published last week. We agree that this important proposal warrants careful consideration—not only by the Government, but by the public and voluntary industry participants that underpin the scheme’s success. In Committee in the other place, the Government made a formal commitment to include community wealth funds as an explicit option in the first consultation launched on the purposes of the English portion.

My honourable friend the Minister for Sport, Tourism, Heritage and Civil Society met Her Majesty’s Opposition and the co-chair of the All-Party Parliamentary Group for “Left Behind” Neighbourhoods to discuss this commitment. With their support, the Government brought forward Amendment 3 to place this commitment in legislation. This responds to calls heard in both Houses to refer to community wealth funds on the face of the Bill—making a clear statement that the Government are considering this model and are supportive of its underlying principles, while protecting the integrity of the consultation process. We maintain that an open and fair consultation, without predetermining its outcomes, is essential to securing the expanded scheme’s impact.

The Government are clear that Amendment 3 is the furthest that the legislation is able to go in this area, and that is why Amendment 2 removes community wealth funds from being pre-emptively named as a possible option in a future order, in favour of Amendment 3.

I thank noble Lords on all sides of the House for the constructive debate that we have had on this issue. I am very grateful for the spirit of positive collaboration shown throughout the passage of the Bill. It is in this spirit that the Government brought forward their amendments. I am also grateful for the scrutiny it has received in the other place, and I believe that this has presented your Lordships’ House with a strengthened Bill. I hope that noble Lords will, therefore, support the Government in these amendments, as was the case in the other place. Sending this Bill on its way to the statute book will enable the Government to shift our focus more swiftly to the implementation of the scheme expansion, including launching the consultation and unlocking hundreds of millions of pounds more across the UK. I beg to move.

[Baroness Barker (LD)]

My Lords, I thank the Minister for his explanation of these amendments. It was most helpful, particularly about Amendment 1, which is very technical. Since it has come from the industry and the whole thrust behind the Bill came from the financial sector, which wishes to see many more assets unlocked in this way, we should accept his explanation and stand behind that.

Charities Bill [HL]

Baroness Barker Excerpts

Monday 10th January 2022 Lords Chamber

[Baroness Barker (LD)]

My Lords, I wish to add my name to the sentiments that have already been expressed. I particularly thank the many people, in different roles, who came together to bring this piece of legislation to our attention, after such a long time and a lot of work. This House prides itself on its detailed scrutiny of Bills, and this is the place in which a Bill such as this should have been given the attention that we gave it.

I regret that we did not manage to agree on the subject raised by the noble Lord, Lord Hodson of Astley Abbotts, which remains an outstanding piece of technical law and a very important point of charity law. It will have an impact on the Charity Commission, as the regulator of charities, to do its job. I do not imagine that that issue will come before Parliament for a very long time, but I hope that those who have followed our proceedings will not let it go.

Secondly, one other very small issue was drawn to our attention by one of our witnesses during our session: the operation by the Crown law officers and the Attorney-General of an alternative cy-près scheme. Legislation does not come much more obscure than that, but this is an issue that, on this occasion, we could not probe fully. I hope that that will happen when this goes to another place and, more importantly, that when the practitioners and people in the charity sector come to reflect on our work, as they will do in years to come, they will regard those two points as unfinished business. But, in the meantime, I thank everyone, including the Minister, for his patience with all of us—we lobbed some very difficult questions at him.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I echo the sentiments that have been expressed across the House. I particularly thank the noble and learned Lord, Lord Etherton, for chairing us so ably. I think that I am right in saying that all of us who participated in Committee had never done so for a Law Commission Bill before, so it was a learning experience for all of us. But the noble and learned Lord, Lord Etherton, is undoubtedly an expert—some would say a leading expert—in this field, and the whole House has benefited from his expertise.

From the experience of my wife, who works in the charitable sector, I know just how lengthy and wide the consultation has been on this Bill over many years. While there are some loose ends, as expressed by the noble Baroness, Lady Barker, this is nevertheless a piece of legislation that the whole House can be proud of. I hope that the impact of the Bill will remain in place for many years to come.

Dormant Assets Bill [HL]

Baroness Barker Excerpts

3rd reading
Tuesday 23rd November 2021 Lords Chamber

[Baroness Barker (LD)]

My Lords, I also thank very much the Minister, his predecessor—the noble Baroness, Lady Barran—and the team. As is always the case with a Bill that is very technical and arcane, they had to display endless patience with the opposition as we painstakingly made our way to the place that they were already at. I also thank my noble friends Lady Bowles and Lady Kramer, who brought to the Bill a completely fresh eye from the financial sector and who set a very high standard of scrutiny for a Bill that is normally given over to those of us interested in the world of charity.

We achieved three things during the passage of the Bill. First, we made it clear that this is not simply an exercise in spending dormant money because it is there. We made sure that the scheme is about achieving impacts on financial inclusion in areas of deprivation. Secondly, we enabled it to be run using far more difficult asset classes than just bank accounts, and we made sure that the reporting systems for that were fit for purpose. Thirdly, we made sure that everyone involved in the scheme is under a duty to report—this is about additionality, not giving the Government a fund that they can dip into in difficult times.

In years to come, we will have reports from the disbursing body and the Secretary of State that I hope will show the impact of this, particularly in one respect: the endeavour to get rid of moneylenders in poor communities. If we achieve that, we will together have achieved something good and which we can be proud to support.

[Lord Parkinson of Whitley Bay (Con)]

My Lords, I am grateful to the noble Lord and the noble Baroness for their comments, and I echo the tributes that they paid to the noble Baroness, Lady Bowles of Berkhamsted, my noble friend Lord Hodgson of Astley Abbotts and many others who contributed to the debates on this.

I will certainly discuss the point that the noble Lord raised with my honourable friend Nigel Huddleston, the Minister with responsibility for the Bill, in his capacity as Minister for Charities and Civil Society, as we just heard in Questions. I am sure that he will want to continue the discussions that we have had on community wealth funds as the Bill goes to another place but, as I say, I am very grateful that it does so with genuine cross-party support and a fair wind behind it. I grateful to all noble Lords who have ensured that this is so.

Charities Bill [HL]

Baroness Barker Excerpts

Thursday 18th November 2021 Other Business

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, since I am not a Member of the Committee, I hope noble Lords will forgive me if I say a few words about why I have taken a particular interest in this sector and this piece of legislation. This comes about because, as long ago as 2005, I was the Conservative Party’s Front-Bench spokesman on what became the Charities Act 2006, which is now the Charities Act 2011. My party was then in opposition, so I was the shadow spokesman and the government Minister on the Bill was the noble Lord, Lord Bassam of Brighton, well known to all of us and a familiar Member of this House.

The 2006 Act represented the biggest shake-up of charity law since 1601. It was a very substantial change and, while it was generally agreed across the House that the sector needed a shake-up, there was a concern about the unintended consequences that might flow from such a big change. We therefore wrote into the Bill, again by consent and with the agreement of the then Labour Government, the need for a five-year review, which I was asked to undertake in 2011. That is really the basis of my interest. This Bill in large measure flows from the work that was done in 2011, which was reported on, looked at and then enhanced and improved by the Law Commission and forms the basis of what we are discussing and approving today.

I want to place on record my thanks for the help I received from what was then the team in the Cabinet Office, now DCMS, led by Ben Harrison who is here today. It was a terrific effort and they were exceptionally helpful. I want to make that very clear.

It is a humbling experience to spend a year looking at the charity sector, because you see what relatively small groups of men and women, with relatively few assets—money, plant, equipment or buildings—do at the local level to improve their communities and make the lives of their fellow citizens better. I therefore felt that there were three things we ought to try to achieve. First, we wanted to have lines of authority and responsibility that were as clear as possible, from the commission and within the 170,000 registered charities. Secondly, because many of those charities are pretty small, we wanted to be deregulatory, as far as possible. It was important, in my view, that people should spend their time on public benefit and not on filling in forms. That is the origin of the phrase that I have heard being used in evidence sessions in Committee of “getting the barnacles off the boat”. Thirdly, overarching this was the need to maintain public trust and confidence in the sector, without which all is lost.

I am sorry for taking a minute or two. I do not want the Committee to think that I am whingeing about the Bill. It is an excellent Bill and I support it very thoroughly. I have a certain avuncular interest in its success, but there are some improvements that we could make and to these I now turn.

When you are known to have undertaken a review of a sector like the charity sector and a piece of charity legislation comes along, you are fair game for a bit of lobbying. Everyone tips up and says, “Have you thought about this? Have you thought about that?” I suppose between 15 and 20 groups came to me about various points in the run-up to Second Reading. I said to them, “That’s absolutely fine, but I’m carrying a spear at the back of the stage on this now. I no longer have any influence on this at all. I’m just a normal Back-Bencher. You need to talk to the Bill team.” My noble friend Lord Parkinson’s predecessor, my noble friend Lady Barran, very kindly arranged for us to meet the Bill team, talk about it and give their details, so I said to each of the people who approached me, “Go to the Bill team and, if you don’t have any satisfaction, then of course come back to me. I’ll be pleased to try to see whether we can get clarity and/or satisfaction.”

Of the bodies that came to approach me only one came back, and this is the subject of these amendments. It was brought to my attention by solicitors acting for the Spilsby Grammar School Foundation, which is a registered charity but an unincorporated association—quite a rare form, but nevertheless one that does still exist. The foundation was created in 1994 to administer the property and funds connected with King Edward VI Grammar School in Spilsby in Lincolnshire. It is a grant-making charity and is not connected with its successor school, the King Edward VI Academy.

The charity is governed by a scheme put in place when it was set up in 1994, and its provisions are now very out of date. Individuals named are no longer alive. Property specifically referred to in it is constitution is no longer owned. Organisations have changed their names and the charity wishes to update its constitution. The trustees were very surprised when, earlier this year, the Charity Commission stated that it was not possible for a charity governed by a scheme—that is to say an unincorporated association—to replace that scheme by a constitution. The Charity Commission said, “A scheme is a narrative of the charity at the moment in time when it was made.” It further said that a schedule detailing the property, all of which was sold prior to 2009, does not require removal from the governing documents. This does not seem a very sensible way of proceeding. The solicitors to the trust said that they were aware of a handful of other foundations in a similar position.

To make it clear, nobody, certainly not I, is suggesting that the trustees of the Spilsby foundation should be free to make whatever changes they feel necessary without the appropriate permission from the Charity Commission. What do I mean by “appropriate”? It depends on precisely the level of importance of the changes you are making, in particular when they are to what are called protected clauses, which are the essence of the rationale and purpose of the individual charity. Clearly, where you are going to change major items of the constitution affecting its purpose, then you will need a higher level of permission.

Amendment 2 deals with a situation where you are dealing with issues that are merely changes of wording: they make no change to the underlying purpose of the charity but just change the wording. What might I mean by this? For example, a lot of charities have words such as “servicemen” in them. We do not have just servicemen anymore; we now have service men and women, so we need to change that to “service personnel”. In many charities, for example, what we would now describe as being disabled is described as “invalid”, which as a term has become slightly pejorative. So you are making changes to bring the document up to date with modern parlance. That is Amendment 2.

But Amendment 1 is where we deal with the wholesale replacement, which, according to the commission’s email on 21 January, is not currently permissible. This is to keep the protected clauses up to date and, obviously, can be done only with the full consent of the Charity Commission.

So when my noble friend the Minister comes to reply, there are three things I think he might say. One is that the Charity Commission was wrong in its interpretation, when it wrecks the Spilsby Grammar School Foundation, and there are ways in which it can update its constitution. The second is that the Government recognise that there is a problem and will take it on board and bring forward some suggested amendments at the next stage of the Bill’s proceedings. I hope that he will say one of those two things. The third thing he might say is that this is all too difficult and the boat has sailed so we must wait until it comes along next time and, in the meantime, Spilsby will have to work with the presently rather unsatisfactory situation. I hope that he will not say that but, with that, I beg to move.

[Baroness Barker (LD)]

My Lords, it has been a real privilege to be part of the Committee for this Bill and, in particular, to have been part of the special evidence sessions that we had, because this is a Law Commission Bill. As the noble Lord, Lord Hodgson, has just demonstrated, this is fiercely technical, arcane law governing very rare situations.

In the original proposals that were put forward, the Law Commission explained that in its recommendations it was trying to take several hundred years of charities’ existence in different forms and formats and try to bring some of the law that applies to charities of different formats—particularly unincorporated charities, as differentiated from incorporated charities; charities can be incorporated in a number of different forms—to try to bring the process of amending governing documents much more into line, so that a trustee in any charity would have a clearer idea of how they could go about amending their charity’s governing document. The Law Commission had to go back through all sorts of different statutes that have led us to the point where we are now in charity law. It readily admitted that, if you were going to invent a way of doing this in future, you would not start from where it had to start.

The Law Commission put in place what it saw as a new way of enabling charities to amend their governing documents. Part of our job today is to try to explain that to people who are not steeped in all the detail of it. What we are talking about, by and large, is charities not changing the purpose for which they exist but changing the ways in which they achieve that purpose. In the case that the noble Lord, Lord Hodgson, set out, he is right that, when a major change concerns the disposal of property, that is a very significant change. Our evidence from the Law Commission said that there is a particular problem in cases such as the one cited by the noble Lord where there may not be a dissolution clause in a very old constitution. Therefore, in order to achieve some kind of disposal of property, it is not possible for the charity simply to dispose of that property and merge with another charity. However, the Law Commission says that it is, and that what it has come up with is a simplified way of doing this. Some charity lawyers disagree with the way in which the Charity Commission has gone about seeking to do that; this is the issue that the noble Lord, Lord Hodgson, has alighted upon.

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As the Attorney-General’s decision of whether to give consent is non-political, as she was at pains to emphasise for all her functions relating to charities, there can be no good reason for not publishing the reasons for refusing consent. This amendment is intended to address both the delay in the Attorney-General making a decision and transparency in the reasons for any refusal of consent by, first, requiring any refusal of consent to be given within 60 days and, secondly, requiring the publication of reasons for refusal of consent.

[Baroness Barker (LD)]

My Lords, in the course of deliberations on the Bill, we have focused, rather predictably, on the Law Commission recommendations rejected by the Government. This is the most important of those. We spent a great deal of time on this in the Committee listening to the Minister and the Attorney-General, talking to the Law Commission in great detail about why it came to the conclusions and put forward the proposals that it did and talking to the witnesses.

A compelling witness was Dr Mary Synge, a specialist academic researcher in charity law. She put forward to us the argument that the reasons for keeping the Attorney-General’s veto on the Charity Commission making a reference to the tribunal were quite weak. The noble Lord, Lord Hodgson, referred to some of them, but one that was particularly weak was that the Attorney-General is part of the legal system; that does not seem a good enough reason to indicate how they add to regulation by the Charity Commission.

The Government’s second reason was the need for consistency in the Attorney-General fulfilling her duty to protect charitable interests. Back in 2006, a case was made during the passage of that Charities Bill that we must at all costs avoid duplication by the Attorney-General and the Charity Commission. The amendments put forward today deal quite effectively with that. There are strong reasons to do that. There are strong reasons to allow the Charity Commission not to have to go through the Attorney-General. The Charity Commission is the effective regulator of charities. It has to be clear on the nature of the charity law that it is to apply. If, as in the cases outlined, the effect of the Attorney-General’s refusal is that the Charity Commission is left in doubt about what charity law is, that cannot be right.

Given that the Charity Commission has the overall duty to make sure that the administration of charities is effective and legal, we should not put this block in its way. It is important that we make sure that the Charity Commission has permission to make a reference without reference to government—therefore, completely away from political interference of any kind. These amendments avoid duplication. They do not prevent the Attorney-General fulfilling her duty in any way. They simply allow the Charity Commission to get on with part of its job, which is to clarify charity law in a timely and effective way. I see no reason to object to either of these amendments which seek to do that.

[Baroness Stowell of Beeston (Con)]

This is the first time I have spoken on the Charities Bill since it was first introduced to your Lordships’ House. I must declare a recent, albeit ceased, interest, to which my noble friend Lord Hodgson has already referred: I was chair of the Charity Commission until the end of February this year. I became chair of the Charity Commission at the end of February 2018. One of the first things I did—it was certainly the first letter I wrote —was write to the then Civil Society Minister asking the Government to adopt the Law Commission’s recommendations and to bring forward a Bill. The fact that the Government decided to bring it forward a few weeks after I had left perhaps illustrates just how influential I was when I was chair of the Charity Commission—I hope not, anyway.

I am very pleased to add my name to the amendment that my noble friend Lord Hodgson has tabled. I want to add some comments to those he has made. After I had written the then Civil Society Minister about the importance of the Law Commission’s recommendations, I regularly raised the matter with DCMS. During 2020, I lobbied DCMS Ministers particularly on the merits of the Bill because of its modest deregulatory measures.

The pressures that charities were under last year, and many are still under a lot of pressures now, made the reason to bring this Bill forward even more compelling. Like my noble friend Lord Hodgson, I want to make it clear that I am delighted that the Government have done so, and they have my wholehearted support for the Bill.

However, I do not understand why, in a Bill that is about deregulation and removing unnecessary burdens on charities, the Government have not adopted the Law Commission’s recommendation to relieve an unnecessary bureaucratic burden on the Charity Commission itself. We have heard this morning that the Members of this Special Public Bill Committee have received evidence from a lot of witnesses over the past few months, but none the less I still feel it necessary to say that I sometimes think that, in general, people see the commission as almost a charity itself, run by well-meaning volunteers. The Charity Commission is the regulator of a sector with an annual turnover of £84 billion. The combined property, assets and investments that it regulates add up £250 billion.

To put that turnover in context, it is five times the size of the UK’s television revenues, which are regulated by Ofcom. I know that Ofcom regulates far more than just television, but even if we look at the banking industry, regulated by the FCA, we see that £84 billion of turnover does not pale into insignificance, because the annual income of the UK banking industry is £124 billion, or so it was a couple of years ago. So the charity sector is not a minnow. Whereas the FCA regulates 50,000 financial entities, which are varied, the Charity Commission regulates 170,000 charities—that is only those that are on the register; tens of thousands more are exempt—and they range from, as we have heard, cultural institutions, university colleges, professional bodies and public schools through to small local community groups.

The commission is run and staffed by professionals who understand charity law and ensure that it is applied, but they do more than that. They represent the interests of the public to charities, and not the interest of charities to the public. I am proud to say that the Charity Commission is probably the least technocratic public body that exists. It does not regulate for the sake of it; it is motivated only by ensuring that charity can maximise its benefit to society. That means that it also has to ensure that people can be confident and have trust in charities to operate in the way they say they do.

The Charity Commission’s most recent annual report shows its success in the courts when anyone has sought to appeal against its findings. Operationally, the Charity Commission has been transformed in the past few years. Clearly, it is still on a programme of improvement which will never stop; it is an organisation that is continually seeking to improve. However, if it is to meet public expectations—and people have a right to have expectations of a regulator which exists to represent their interests—many of the improvements that still need to be made rely on it having more powers to take action against wrongdoing more swiftly and in a way that leads to less bureaucracy.

That the Government consider it necessary to retain the arrangement whereby the commission needs the permission of a Minister, albeit the Attorney-General, to refer a matter to the tribunal to get clarity on a point of law beggars belief. I really hope that the Committee will support the amendment that I have put my name to.

I note that the noble and learned Lord, Lord Etherton, has tabled an alternative amendment. When the noble Lord, Lord Ponsonby, comes to respond, can he advise what protection there would be in the approach suggested by the noble and learned Lord—that is, in the 60-day period that is suggested—to avoid a situation where the Attorney-General might say, “You need to think about it a bit more”? Basically, would the clock keep getting reset? As noble Lords have already heard from the noble Lord, Lord Hodgson, in the context of the Royal Albert Hall, the Charity Commission has experienced, certainly for the past few years, a never-ending prevarication in terms of any decision being made by the Attorney-General.

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[Baroness Barker (LD)]

I am sorry, but this is getting a bit Jarndyce v Jarndyce. That case has not been concluded. There has been no clarification on that point of charity law. That is the problem.

[Lord Parkinson of Whitley Bay (Con)]

I am sorry, I should have said that I am glad that the long saga to which my noble friend referred has come to an end, but these are complex issues. We do not think we should give too much prominence to one case, long and complex though it may be. We do not think we should look to legislate to remove what is an important check and balance in the system on the basis of the evidence from that unique case, but I have heard the points of concern raised by noble Lords not just today but throughout our consideration of this Bill. We will certainly take away Amendment 6 from the noble and learned Lord, Lord Etherton, to consider it further ahead of Report, but I repeat that I hope my noble friend Lord Hodgson will withdraw Amendment 5.

Dormant Assets Bill [HL]

Baroness Barker Excerpts

Report stage
Tuesday 16th November 2021 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Lister of Burtersett. I think the case for this amendment has been powerfully made and I want to show the breadth of support for it.

Last night in the policing Bill we were debating how we saw a grass-roots-up initiative starting from Nottingham that saw the practice of recording misogyny as a hate crime. So many new ideas and innovations start with the local and start in local areas. Yet we live in one of the most centralised nations on this planet, certainly in Europe, with power and resources concentrated here in Westminster. This amendment very modestly puts power and resources out into places that desperately need them.

Often, we are talking about places that no longer have a place to meet—even the pubs have closed in many of the poorest communities that I see. Lots of housing has recently been built without any public meeting places and places for people to gather at all. What we are talking about here is giving power to local communities that are really struggling, to let them decide for themselves what they need to do. I think we could see some truly wonderful innovations starting from the community wealth fund that then could spread far more widely. Perhaps appropriately for a Green, let us think about throwing out some seeds and seeing some wonderful plants flourishing, flowering and growing.

[Baroness Barker (LD)]

My Lords, when I initially heard about community wealth funds, I was rather sceptical, and I perhaps remain on the more sceptical end of the spectrum in your Lordships’ House. But during discussions on the Bill, I have become less sceptical about the idea, as the noble Lords, Lord Bassam of Brighton and Lord Hodgson of Astley Abbotts, have talked to me, along with the groups mentioned by the right reverend Prelate the Bishop of Ely.

Two things in particular have caused me to think again. The first is the experience of the pandemic and how everybody’s sense of locality and place has changed. I happen to live in south London, and one of the many things that got me through the toughest of times was discovering local parks that I had never come across before. Watching other people having to live their lives in a much more geographically restricted scope has made a new sense of place. I now understand —in a way that I perhaps did not before—that being able to appreciate and develop your community space will be a very important part of people’s physical, economic and mental well-being in future.

The second reason why I have changed my mind is this. The noble Baroness gave a long list of community initiatives that have flowed out over the past 30 years, many of them from the National Lottery, the new deal for communities and so on. Pretty much all of them were the release of resources into a community, with varying degrees of restriction on how they could be spent—but they were resources to be spent in poor communities.

This is about something different. It is about an investment fund that has to generate wealth within those communities. To do that, the people who will be managing it locally will have to learn and display economic development skills themselves. That is a different proposal from the ones before. The noble Baroness is right that, as we move through a huge period of economic change—green development and the green economy—if we get away from the old idea of development solely in buildings and talk about investment in economic skills and new jobs, managed in a much more local way, that has the potential to be different.

The noble Lord, Lord Hodgson of Astley Abbotts, was absolutely right: we had to grab a passing Bill and shove something on to it. But the very purpose of this Bill is to take assets that are lying dormant and put them into communities where people are financially excluded, do not have business skills or need some help with the generation of wealth and well-being. This is about doing that with people in their community, not yet another building. So I have changed my mind and think this is something different, and therefore I now think it is worthy of support.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

My Lords, I thank the noble Lord, Lord Bassam of Brighton, the noble Baroness, Lady Kramer, the right reverend Prelate the Bishop of Newcastle, and my noble friend Lord Hodgson of Astley Abbotts for tabling this amendment relating to community wealth funds. I am also grateful to the right reverend Prelate the Bishop of Ely, who spoke on behalf of his right reverend friend, who, as he explained, has made her valedictory speech to your Lordships’ House and is therefore unable to speak today. I offer my best wishes to her as she leaves your Lordships’ House for a well-earned retirement and thank her for her contributions, both here in your Lordships’ House and across the diocese; it is one I hold particularly dear, having been baptised in it and having many relatives who live there still. I know that she will be much missed, but we are delighted that, through the apostolic succession, the right reverend prelate the Bishop of Ely was able to speak for her today.

I hope that, during my remarks, I can reassure all noble Lords who have spoken that it is already possible for community wealth funds to be a named cause in an order made under Section 18A, and that I can demonstrate why this amendment, even in its semi-skimmed form—if that is the evolution from the full-fat version to which the noble Lord, Lord Bassam, alluded earlier—is still unnecessary.

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[Baroness Barker (LD)]

My Lords, I will just add two points to the very convincing case made by noble friend Lady Kramer. First, the Minister knows from all our discussions that we on these Benches have concerns about the loose nature of this scheme and the somewhat loose definition of its purposes. Therefore, it remains a concern that it is a not insignificant pot of money that can be very easily diverted. Part of what we are trying to do this afternoon, in a number of different ways, is to bring this scheme under a much tighter definition and close loopholes.

Secondly, we listened very carefully to the noble Baroness, Lady Barran, and the noble Lord himself, when we had discussions. They explained to us, in particular, that the new purposes under the Bill—financial inclusion and the very ambitious programme that Fair4All Finance has of putting loan sharks out of business—might necessitate the sorts of skills that are not commonly found within the social enterprise or charitable sector. It might require there to be companies in forms that are not usually found within the social enterprise sector, either. So I would like the Minister to acknowledge, in dealing with this amendment, that it is specifically that part of the scheme which has caused us to move. We are not talking about private companies entering into the other parts of the Bill, to my mind—unless he can make a case for them to do so.

[Lord Parkinson of Whitley Bay (Con)]

I am grateful to the noble Baronesses for their amendment and for their vigilance and scrutiny in this area. I am grateful also for their time the other day, when we had a helpful discussion.

Amendment 2 concerns the direction of the English portion of dormant assets funding and seeks to ensure that money cannot be used purely for profit but must have public good at its heart. It is already enshrined in primary legislation that dormant assets funding must be distributed to initiatives with a social or environmental purpose. This is a clear and core function of the scheme and it remains unchanged in the Bill. The Government of course agree that private profit is not the purpose of the dormant assets scheme.

The noble Baronesses’ concerns, as expressed in the amendment and their contributions today, relate to the scheme’s current support for social investment. As I mentioned in the debate on the previous group, dormant assets funding has provided £465 million to Big Society Capital and Access over the last 10 years. During that time, social impact investing in the UK has grown almost eightfold, increasing from £830 million in 2011 to £6.4 billion now, thanks in large part to those two organisations. It is largely by leveraging private capital alongside dormant assets that the market has been able to expand in this way, providing the voluntary, community, and social enterprise sector with access to billions of pounds of investment.

To give an example, dormant assets funding enabled Big Society Capital to invest £6 million in the Fair By Design fund, which aims to eradicate the poverty premium by 2028. Fair By Design invests in several initiatives, including some businesses with considerable impact which provide services in sectors such as energy, insurance, borrowing, transport and food, to support over 340,000 people across the country. Its work has helped those people collectively to save £12 million per year on goods and services for which they were previously paying more than those who were financially better off. The scheme advances important opportunities such as this for collaborating with the private sector and civil society organisations to amplify its impact, within the boundaries of governance structures which ensure that the money is managed appropriately.

I hope I can reassure noble Lords that robust systems are in place to ensure that the money funds projects delivered by organisations that prioritise impact. As a registered charity itself, Access employs strict eligibility criteria for its funding, which ensures that money flows only to those social enterprises and charities that it was created to support. Similarly, £2.5 billion from Big Society Capital and its co-investors is being used to support over 1,500 social enterprises and charities across the country. Both organisations apply layers of due diligence to ensure that the intermediary fund managers with whom they work also have impact embedded in their approaches. Fund managers applying for Big Society Capital funding are required to present a social impact plan during the due diligence process, and Access requires its funds to be held in finance structures that cannot be used commercially.

As these existing structures have operated effectively over the past decade, we do not consider it necessary to place in primary legislation a requirement such as that proposed by Amendment 2, though we understand the concerns the noble Baronesses had and the vigilance which led them to table it. The scheme already ensures that funds go towards organisations with the overall aim of delivering public good, and we will ensure that this continues to be the case.

Ultimately, it remains the Government’s priority to afford people the opportunity to have a say in how funds are distributed in the country, including whether social investment should remain a priority. That is why we have committed to a public consultation to welcome wide-ranging views on how these funds can best have an impact on social and environmental priorities in England. Those are the reasons we cannot accept the amendment, and I hope that the noble Baroness will be satisfied to withdraw it.

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[Lord Bassam of Brighton (Lab)]

My Lords, this is an important topic. It took quite a bit of our time in Committee, has been raised again today and runs as a thread through our concerns. We have had some discussion with the Minister between stages, and useful discussion it was.

We acknowledge that additionality has been built into Amendment 7 in the next group, but we are very sympathetic to the call from the noble Baronesses, Lady Kramer and Lady Barker, for the Secretary of State to certify as part of the regulation-making process that funds will indeed be on top of existing government commitments. The noble Baroness, Lady Kramer, has made quite a compelling argument. Dormant assets are going to grow. There are many other sources of dormant assets not included within the current scheme. I could see a hungry Treasury, worried about the supply of funds in the future, seeking to make use of substitute funding from dormant assets. I think we will need to be thoroughly convinced by the words of the Minister this afternoon if he is to avoid us having a further Division.

If the Government have no plans to pull accounting tricks, I would have thought that there was no issue with accepting this amendment or perhaps introducing a new text either at Third Reading or when the Bill moves to the House of Commons to put this issue beyond doubt. That is what I am listening for this afternoon and hoping to hear from the noble Lord.

[Baroness Barker (LD)]

My Lords, I wish to add two points to those made by my noble friend Lady Kramer. It is right that in the next government amendment there is reference to a report and the additionality principle being included in that report. The reason why we drafted this amendment in the way we did was the requirement for the Secretary of State to certify the matter. One of the criticisms that was initially made of this Bill by the Delegated Powers Committee was the number of Henry VIII powers being assumed by the Minister.

The second reason is that the next government amendment refers to:

“Periodic review and report to Parliament”.


It does not say what those periods should be. Therefore, we are trying to deal with exactly the sort of scenario outlined by my noble friend Lady Kramer, where the Government suddenly dip into this back pocket of money and start to use it. That is the reason why it is there and why we think it is so important.

[Lord Parkinson of Whitley Bay (Con)]

I am grateful to the noble Baronesses, Lady Kramer and Lady Barker, for tabling Amendment 6 on the additionality principle. I also thank the noble Baronesses for their time in the productive discussion that we had on this issue. I hope that during the course of my remarks I can reassure them and other noble Lords that the intentions of this amendment are sufficiently covered both in the 2008 Act and through the Government’s Amendment 7, to which the noble Baroness, Lady Barker, just alluded.

The principle of additionality has successfully under- pinned the scheme since its inception and will continue to be a core principle of its distribution across the UK. In line with the proposed wording in Amendment 6, the 2008 Act already describes additionality as the

“principle that dormant account money should be used to fund projects, or aspects of projects, for which funds would be unlikely to be made available by … a Government department”

or devolved Administration. Therefore, the principle as defined by this amendment is already enshrined in legislation.

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[Lord Parkinson of Whitley Bay (Con)]

The commitment is already made in the 2008 Act. If there is a change in distributor, or if an additional distributor is established— and I should stress that there are currently no plans for that—there are already powers in the 2008 Act to amend the legislation to ensure that any new or additional distributor must similarly report on their policy and practice in relation to the additionality principle.

However, we have responded to the noble Baroness’s desire to see the Secretary of State more specifically held accountable to the principle, and we have reinforced its importance even further by including it within Amendment 7, which we will come on to shortly, on reviewing the scheme and reporting to Parliament. The noble Baroness, Lady Barker, said in Committee:

“We must also be able to work out from all the reporting that we do get to see that the principle of additionality is being adhered to.”—[Official Report, 21/6/21; col. GC 9.]

We thoroughly agree, which is why our Amendment 7 will ensure that the report must include any policies and practices of the principle by the Secretary of State as well as the National Lottery Community Fund. This provision responds to requests made by noble Lords that the Secretary of State should be held more expressly accountable for ensuring that and explaining how dormant assets funding is used in ways that are genuinely additional to central Government expenditure. This demonstrates our ongoing commitment to ensuring that the principle continues to be honoured, including the ways in which funding flows to distributing bodies and on to beneficiaries.

That is why we cannot accept the amendment. I hope I have reassured the noble Baronesses that we understand their concerns, and that is why we have brought forward the additionality provision in our review and reporting amendment, Amendment 7. I can see the noble Baroness is rightly consulting the 2008 Act for the references to it. I hope on that basis she will be content with what we have proposed and content to withdraw her amendment.

[Baroness Barker (LD)]

My Lords, I thank the Minister for the attention he has given to this, but I will pick him up on one issue. A power to do something is only a power; it is not an undertaking that the thing will be done. I do not think he has spelled out, as I hoped he would, how exactly the Secretary of State would be reviewing the additionality and demonstrating the additionality. It may be that he is going to come on to that under Amendment 7. But it seems to me that it is only the Secretary of State who can determine whether something is additional or not, because only the Secretary of State can have full knowledge of what the Government’s overall intentions were. I think this is important. I think we have had the example my noble friend talked about, and I would therefore like to test the opinion of the House.

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Moved by

[Baroness Barker]

9: After Clause 29, insert the following new Clause—
“Capacity of the Oversight Trust
(1) Within six months of the day on which this Act is passed the Secretary of State must lay before Parliament a review of the Oversight Trust. (2) The review in subsection (1) must include but is not limited to an assessment of—(a) the capacity of the Oversight Trust to oversee the operations of companies that receive dormant assets money;(b) whether the Oversight Trust has the appropriate resources to fulfil its objective;(c) whether the Oversight Trust has the appropriate powers to fulfil its objective; and(d) whether a duty should be placed on the Oversight Trust to monitor the distribution of dormant assets money, and whether it would have the resources to undertake this duty.(3) The review in subsection (1) must make a recommendation as to whether the Government should bring forward further legislation to improve the capacity and effectiveness of the Oversight Trust.”Member’s explanatory statement
This amendment would require the Government to undertake a review of the capacity of the Oversight Trust and make a recommendation as to whether further legislation is needed to improve its effectiveness.

[Baroness Barker (LD)]

My Lords, as those who followed our previous deliberations will know, when this scheme was originally set up, the Government introduced an arm’s-length body, the Oversight Trust, to monitor the performance of the distribution bodies. It is a very small entity with a small budget and it does not have a great many staff.

The question we put to the noble Baroness, Lady Barran, in Committee was whether this small body would be able to deal with a scheme that was going to increase in not only volume but complexity. Having listened to what the noble Baroness said, we on these Benches went off and met the Oversight Trust. We had already spent time reading some of its reports and reviews. Every year, it produces a report on all of the distributors and does a very detailed report on one of the distributors.

It became apparent in our conversation with the Oversight Trust that, although it has done several reviews of the bodies that have grown out of Big Society Capital and so on, it has not yet done a big, deep review of Fair4All Finance. As I said before, that area of work is perhaps the most difficult of all, in that it is about, in short, trying to put loan sharks out of business by making sure that there is affordable finance in poor communities.

It seems to us that understanding the impact or performance of a body such as that is different and less easy in terms of the annual reports and accounts that the trust is used to looking at. In particular, through the youth finance bodies and so on, it is more used to looking at charities and social enterprises. Therefore, we thought it not unreasonable to ask the Government to look at the capacity of that body to ensure proper and deep oversight of a much more complex scheme. Consequently, we have tabled this amendment to raise the issue at this stage. I look forward to the Minister’s response and I beg to move.

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[Lord Parkinson of Whitley Bay (Con)]

We do; we keep it under review and, if the oversight trust took on a broader role, would review whether it would need additional resources. For the reasons I have set out, we cannot accept Amendment 9, and I hope the noble Baroness will be content to withdraw it.

[Baroness Barker (LD)]

My Lords, I thank the Minister for his full answer. It will come as no surprise to him that we do not intend to seek to put the amendment in the Bill, but the issues we have raised have a great deal of merit.

When we met Sir Stuart Etherington, the chair of the oversight trust, he set out clearly to us, as the Minister just has, exactly what the responsibilities of the trust are and how it goes about discharging them. He said that, although it has a responsibility to look at governance and management arrangements that impact on reporting, and has the power to remove directors and the chair, the oversight trust regards that as being a nuclear option—it would have to be something rather major for it to do that. By the time it got to that stage, there would already have been a significant scandal. That is what we are worried about with this whole scheme, and have been since the very beginning, because there are so many loopholes.

However, I hear what the Minister says about this being kept under review, alongside the periodic review of the whole scheme. With that assurance, I am quite happy to withdraw the amendment.

Amendment 9 withdrawn.

Charities Bill [HL]

Baroness Barker Excerpts

Wednesday 7th July 2021 Grand Committee

[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.

Dormant Assets Bill [HL]

Baroness Barker Excerpts

Committee stage
Wednesday 23rd June 2021 Grand Committee

[Lord Blunkett (Lab)]

My Lords, I am very pleased to have put my name behind Amendment 55, spoken to by the noble Lord, Lord Hodgson. I strongly support the presentation that he made this afternoon. His work on the charities report and in chairing the Select Committee on Citizenship and Civic Engagement were milestones in understanding the critical importance of civil society and an enabling state. The way in which he presented his case this afternoon reinforced the importance of communitarianism—of building from the bottom, and of engagement with and facilitating the ability of communities to work for themselves and those whom they serve.

In a moment, I will obviously wish to speak to Amendment 56A in my name, but I want to say a word or two first in support of the noble Lord, Lord Hodgson, and my noble friend Lord Bassam in terms of the possibility in future of building from local experiments and local development into a national community wealth fund, and the facilitation of that through the legislation so that it might happen organically. I am proud of the work done over the years by South Yorkshire’s Community Foundation, which has been able to distribute grants and support local initiatives. Greater funding and support for that kind of operation is where organic change can take place and where people can see not only the contribution made from the unclaimed assets fund but the contribution that they can make in small ways by adding to that and being part of the process of delivery. They see where the funds have gone, experience the benefit of them and then take forward those learning processes to build that enabling state at local level, reinforcing civil society and enabling people to make decisions for themselves. The case is overwhelming and the question is about how we should go forward. I hope that the noble Baroness will be able to indicate that on Report there will be a welcome for a facilitating clause, which will enable us to move forward on that.

On Amendment 56A, I commend the Kickstart money and those who have, over many years, fought for better financial education throughout the education service. Obviously, this applies to young people who reach 16 and are looking to their future. I remember, as Secretary of State for Work and Pensions, going around the country on a fact-finding and informing exercise on what needed to be done about the future of pensions and the pension age. We were picking up the report by Adair Turner—the noble Lord, Lord Turner—and looking at the extension of the working age. We looked at auto-enrolment, which took so many years to implement, having been agreed back in 2005, and the way in which young people should think about their future.

This was complemented by the then child trust fund, which we addressed in the House yesterday and is relevant here. It was designed to enable people to have a nest egg—a small amount of capital that they could engage in their own lives. What we are talking about here has a synergy, and it is important for us to understand how the capital asset divide is a major challenge for the future. If you inherit a house from grandparents, parents or an uncle or aunt in London, it is the equivalent of winning the lottery. If you live in rented accommodation in the north of Sheffield, Barnsley or elsewhere and have nothing to pass on to future generations, you will see the reinforcement of intergenerational disadvantage.

I hope that financial education will help in its own right but also with the wider debate on where we are going as a country. It is particularly important that this happens at primary level; at secondary level, there is at least PHSE and the emphasis that can be placed on the economic side of the financial learning exercise. In the citizenship curriculum, the wider issues can be addressed as well. In primary education, those two things, while relevant to the curriculum, are not taught in a specific or identifiable way and it is really important that we get it into primary education at a very early stage so that young people understand the importance of their part in managing their money and how the financial world works around them. The unclaimed assets fund could be of great benefit if we can get this right.

[Baroness Barker (LD)]

My Lords, I, too, was a member of the Select Committee on citizenship, but clearly I did not make as big an impression as the noble Lord, Lord Blunkett, or the noble Baroness, Lady Lister. I am very glad that I was, however, because it was one of those pieces of work from which one comes away having learned a great deal about a subject that one thought one already knew a lot about but where there was much more to learn.

One of the lessons that came to members of that committee quite forcefully, particularly from people in communities that felt they had been left behind, was the very low level of knowledge of how to participate in local democracy—simple things such as knowing how to be eligible to vote, for example. In part, that fuels what I shall say over the next few minutes. I do not object to community wealth funds; I have considered them over the past few years and they are undoubtedly well intentioned and beneficial. It is also undeniable that they would in some—perhaps most—cases provide assets to go with the aspirations of local people to own and control the assets, which they are already legally able to acquire under the challenge fund and with the assistance of organisations such as Locality and so on. That legal right is already there.

My question about this is: in general, is the addition of another entity that has to be governed, managed, staffed and accountable advisable? Is it an addition or will it be an unnecessary added complication? We have hundreds of local community groups that rely on the knowledge, skills and good will of people in those localities. What they very often lack is technical skills.

Here I will pick up some of the points made by the noble Lord, Lord Bassam of Brighton, about the National Lottery Community Fund. I go back a very long way. I remember the creation of that fund and the impact it had on the voluntary sector, which I worked in at that point. It is unarguable that the fund brought in resources that could not have been imagined before its creation for capital, sports and social programmes.

However, it has always been a puzzle to me how we enabled the National Lottery Community Fund to be created and to be the size and extent it is, yet we have never had a requirement that part of its money would go towards sustaining and developing the infrastructure of the charities and community groups that largely deliver its programmes. The National Lottery sits on top of the rest of the voluntary sector and requires it to deliver its agenda. It does not have an obligation to sustain it.

It is worth noting that the financial position of the voluntary sector is vastly different from how it was even 25 years ago. Many noble Lords will know that NCVO, together with Nottingham Trent University, is carrying out a tracking exercise on the impact of Covid on the voluntary sector. It is producing some really interesting results about the way levels of demand for local services are rising and the extent to which, in this last year and in the forthcoming year, the resources of those charities will be under significant strain. At least 30% of them expect that they will have run out of reserves and will go out of business. That is the overall position.

I will tell just one story. Quite a number of years ago, National Lottery funding was used to develop a series of healthy ageing centres. These were flagship programmes set up with five-year funding. The great thing about them was that they had to be innovative and dynamic. Therefore, they have to be free-standing and to bring in new partners. They therefore could not be set up and run by the existing local older people’s organisations. They ran very well and highly successfully. Then the five-year funding ended, at which point the remnants of their good programmes were all absorbed by the then-existing local Age Concerns and so on. I wonder whether, in setting up this kind of mechanism, we might not set people up for a similar kind of scenario.

--- Later in debate ---

Moved by

[Baroness Barker]

64: After Clause 29, insert the following new Clause—
“Eligible recipients of dormant assets funds
(1) The Dormant Bank and Building Society Accounts Act 2008 is amended as follows.(2) In section 16(1), at end insert “to social enterprises and charities”.(3) In section 16(3), at end insert “to social enterprises and charities or to a body that will make grants or loans, or make or enter other arrangements for the purposes of complying with subsection (1), with social enterprises and charities”.Member’s explanatory statement
This amendment would mean that all the holders of funds would have to be registered social enterprises and charities and that any bodies that received funding would have in turn to work with social enterprises and charities.

[Baroness Barker (LD)]

My Lords, I declare an interest as a member of the All-Party Parliamentary Group on Social Enterprise, at whose recent AGM I had the pleasure of listening to the Minister address the subject that we are coming to now. I admit that one of the reasons why I wanted to table this amendment was that, up until approximately an hour ago, the Committee had had very little discussion on social enterprises. We had, naturally, tended to focus on community groups and voluntary sector organisations and that is the trouble; social enterprises are always getting lost in discussions such as this. They also get lost when we come to talk about industrial strategy and so on. I wanted to focus some attention back on them because the dormant assets funding that has been released so far into the Big Society Capital fund and the Access foundation has been really important. It has helped more than 5,000 social enterprises since 2010, dormant assets worth £460 million have been put through social investment, and it has directly supported more than 1,500 organisations. It will be pleasing to some noble Lords that the vast majority—82%—of those organisations have been outside London, so the investment has been going into communities which are, by definition, less wealthy.

Social Enterprise UK, whose chair is the noble Lord, Lord Adebowale, is currently investigating the impact of that, but we know that it is still difficult for social enterprises to access finance and that access to what finance exists is uneven. There is a particular deficiency in support for some minority ethnic organisations. It has always been the case that women and people from minority communities in any walk of life or business have had more difficulty than others in accessing capital. The biggest problem has been access to what is known as patient risk capital—long-term investments—for social enterprises. Dormant assets are exactly what would work for that.

That is the background to my amendment, which seeks to do two things. One is to limit the beneficiaries of the dormant assets scheme to charities and social enterprises. The reason for this is that, as the primary purpose of this legislation moves away from Parliament and down through departments, and given the experience of a year ago, when we watched the Government scrabbling to find money down the back of departmental sofas to put towards the voluntary and community sector, there is a feeling out there that we have to protect these funds from temporary political exigencies. We particularly need to protect against the creation of new vehicles, some of which may be companies, in an attempt to deliver the agreed main outputs of this fund.

Secondly, my amendment would limit the distributing bodies to being charities or social enterprises. We have already seen the emergence into that field of one entity which is not a charity or social enterprise. My noble friend Lady Kramer, who comes from the banking profession, has in previous discussions noted that if colleagues in her former profession were to see a profitable avenue to go down, they might well develop a new arm to do that. In the scope of banking it is not a massive amount of money, but we are talking about billions of pounds of assets.

It is for those reasons that I have tabled this amendment, and it is those issues that I wish to test in discussion. I therefore beg to move.

[Baroness Kramer (LD)]

My Lords, I shall be brief, because my noble friend Lady Barker has basically laid out the case. I suspect that it was thought a given by everybody in 2008 that the money would go to charities and social enterprises; it probably never occurred to them to do anything else. We live in a much more varied world these days, so it would seem to make sense to add the clarity which the amendment seeks.

When we considered some of the amendments on who should be consulted, they talked about charities. There is a tendency to forget the social enterprise sector and the crucial role it plays. It is a rapidly growing role. I was stunned to learn of the findings of a survey recently conducted by Social Enterprise UK to work out the size of its sector. It started off with the assumption that it was a sector of around £24 billion and discovered that it was one of around £60 billion. An awful lot gets missed and somehow goes under the radar. We need to make sure that attention is appropriately drawn. The amendment is successful in doing that.

As we move into the post-Covid world, we will need to pull all the good levers that we have. That means the social enterprise lever as well as the charitable lever. Making sure that the language matches the reality strikes me as significant and useful. I hope that the points that my noble friend has made will be taken on board. Sometimes it is important to make things explicit, particularly in legislation. I cannot think that it constrains the Government in any way that they would find unacceptable, but it may ring the bell of DCMS when it does the consultation to think, “One of the usual suspects we need to go and listen to is going to be in the social enterprise world; it won’t just be in the big charities world”. Sometimes, we have to do something to make sure those messages get through.

--- Later in debate ---

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

I have received no requests to speak after the Minister, so I call the noble Baroness, Lady Barker.

[Baroness Barker (LD)]

I thank all noble Lords who spoke in support of my amendment, in particular the noble Baroness, Lady Merron. I thank the Minister for her considered reply. I hope she will understand that we have agreed from the outset of our discussions that there is an overall consensus about the benefit of the scheme and the Government’s intentions to take the existing scheme, grow it and make it work efficiently and effectively.

However, throughout our discussions the Minister will have picked up from all Benches a not inconsiderable degree of concern about the way the scheme is moving away from the initial primary legislation into secondary legislation, and the considerable powers of Ministers to change fairly fundamental aspects of it without further scrutiny. Although she was complimentary and supportive of voluntary organisations and social enterprises in her response, as I fully expected she would be, she still left the door open for for-profit companies to take over aspects of the scheme without any limitation. I worry about that. It is a real concern, particularly given the way parliamentary scrutiny is being watered down by the concept of the Bill.

I heard what the Minister said on this matter, but I am not reassured and I reserve my position for later stages, because there is something deficient about leaving the door open for the growth of non-charitable and non-social enterprise players in the distribution of this money. However, I heard what she said. We have come to the end of our discussions today and I thank her very much for the answer she gave. Therefore, for the moment, I beg leave to withdraw the amendment.

Amendment 64 withdrawn.

Dormant Assets Bill [HL]

Baroness Barker Excerpts

Committee stage
Monday 21st June 2021 Grand Committee

[Baroness Barker (LD)]

My Lords, following our Second Reading, I went away and reflected on the way in which the Bill has been received and debated in your Lordships’ House. It would be fair to say that noble Lords as a whole wish to be supportive of the Government in what they are trying to do in the Bill. However, from a number of different perspectives, we all have questions about the effectiveness and efficiency of this method of doing things.

In particular, I tabled my Amendment 63 to make the point that nowhere in this Bill, or in its predecessor, is there an explicit statement about what these assets are supposed to be used to achieve. If we do not know what the objectives are, it is difficult to measure either the effectiveness or the efficiency with which the vehicle that has been constructed is doing that. It therefore seems that we as a House have an obligation to look at the reporting mechanisms that already exist. There are many of them in different places. They are all bits and pieces that you have to go and look at in, for example, the National Lottery Community Fund reports or the Reclaim Fund Ltd reports. Much of the detail of income and expenditure is in those reports, but there is very little in any of them on what has happened in terms of the impact.

My understanding is that the fund exists to use dormant assets not just because they happen to be there but for specific purposes of financial inclusion and developing financial literacy, particularly within poorer communities. That is what I really want us to try to have. When the Minister introduced the Bill at Second Reading, I was very struck when she said to us that the main impetus behind it coming to us was from the financial services industry, which wishes to see more dormant assets being used. That is fine—I absolutely agree with that—but to what end, and is the expenditure on this being done properly?

Noble Lords have to understand that the charitable sector is in a seriously bad way. A year ago, the Government asked the charitable sector what it thought the impact of Covid would be. In the initial lockdown, it thought that it would lose £4 billion. We have been through three lockdowns since that one. The government funds released to the sector in response to that figure of £4 billion were £750 million, of which £150 million came from bringing forward some of the dormant assets referred to in the Bill. The whole of the charitable sector is going to experience severe problems. It is every part of it, from Cancer Research UK already having to delay some of its projected work for the next five years through to the small neighbourhood organisations.

It is therefore extremely important that these assets be used for the express purpose for which they have been given and used as effectively as possible. We must also be able to work out from all the reporting that we do get to see that the principle of additionality is being adhered to: that these are funds for a specific reason, and that they are largely treated as one-off and not as ongoing revenue, particularly when government comes to talk about its overall response to the charitable sector.

My amendment was in part a nod to the Public Accounts Committee’s report of 9 June, in which it came up with its analysis of the Government’s response to the charitable sector and Covid. I understand that that report relates not just to the £150 million of dormant assets funding but to the £750 million. Nevertheless, the PAC raised significant questions in it, not least about the National Lottery Community Fund being able to provide sufficient data about what is happening with the distribution of some of its funds to poorer communities. Similarly, the report raised questions with the Charity Commission and the Government about the ongoing viability of charities, which are sometimes involved in quite essential charitable work.

For all those reasons, I came up with my amendment. I am agnostic on the length of time to be taken. I do not think that, for a programme of this kind, it is worth doing reports of anything under three years, because I do not think that you can generate significant data in fewer than three years, but we should have reports that are something more than a succession of different sets of accounts and annual statements for the different bodies responsible for the collection or the distribution of money, and we should look at whether this will continue to be the best way to deal with this issue. That is my amendment.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, the noble Baroness, Lady Barker, made a very important point about impact. I will come back to it in a moment in my remarks.

In the first instance, we heard from the noble Lord, Lord Bassam of Brighton, and the noble and learned Lord, Lord Etherton, about the timing of reviews to look at whether the structure is working effectively now and will work effectively at some date in the future. I want to probe the Minister a little further about the situation now and the current operation of the system. Specifically, I want to ask her whether the Government think that the existing powers to investigate, measure and check are sufficient.

As I understand it—I stand to be corrected—under the present system, money from the fund is passed to recipient bodies or recipient groups by what are called distributors, which have clear responsibilities to decide which bodies are worthy of funding and should get the money, and, after the funds have been passed over, to ensure that the proceeds are spent properly, effectively and in accordance with the way envisaged at the time of the grant. Again, as I understand it, there are currently four distributors: Big Society Capital, Access, Fair4All Finance and the Youth Futures Foundation.

The work of these four distributors is overseen by the Oversight Trust, which has no power to determine where the money goes but is charged with ensuring that the distributors have effective procedures in place to ensure good governance and proper performance of their duties. Clearly, the Oversight Trust has a very important role to play in maintaining public trust and confidence in the dormant assets scheme.

Can my noble friend enlighten me on three points? First, can a new distributor be appointed or dis-appointed? Who decides that and initiates it? If a decision is made to go ahead, what powers, if any, does the Oversight Trust, which is responsible for monitoring that body, have in making that final decision? That is my first question: can we remove or add distributors? How do we do it? What role does the Oversight Trust have in that process?

Secondly, and more generally, are the Government satisfied that the Oversight Trust has the powers necessary to fulfil this important role? For example, are distributors required or obliged to collaborate and co-operate with the Oversight Trust to ensure that it performs its duties effectively?

Thirdly—this point was made by the noble Baroness, Lady Barker—what role, if any, does the Oversight Trust have in measuring the impact of what the distributors are doing? Do we look in any way at whether the distribution policy being followed by one of the four groups now in power to do this makes sense for our society, or are they free as a bird? It would be helpful if the Minister could say a little about that.

Finally, it must be of importance, as we begin to see the expansion of the whole scheme—I think every Member of your Lordships’ House thinks that it is a good idea in principle; I certainly do—to ensure that the governance structure is adequate for the increased responsibilities that will be placed on it. I hope that my noble friend the Minister will be able to reassure me on these points when she replies to the debate.