Charities (Protection and Social Investment) Bill [HL]
Baroness Barker Excerpts(8 years, 10 months ago)
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Baroness Barker (LD)
My Lords, I am intrigued by the amendment. My response to it, on the basis of about 30 years of working with trustees of charities, many of which were unincorporated associations—some were not; some were incorporated—is that the prospect of losing one’s house as a consequence of a decision one made when acting as a trustee was one of the most sobering responsibilities of trusteeship. Indeed, were Lord Phillips with us today, he would explain how, throughout the history of charity law, even though charities have become much more complex as the areas in which they operate have become much more complicated, we have maintained the entity of an unincorporated association precisely to preserve the importance of trusteeship. That said, in my experience, trustees of unincorporated associations were always desperate either to try to get liability insurance, if they possibly could, or to incorporate, precisely to minimise their own risk.
We have kept unincorporated associations because they have an importance in the field of charity. It is important that we still have organisations in which individuals come together and are willing to put their own assets on the line in order to do good and to be judged as such. As with many of the arguments that I have listened to this afternoon, my response is that if there is a new body of evidence that this measure is required because a new form of abuse is going on, I am willing to look at it. However, I take issue with the noble Baroness, Lady Deech: this is not a simple tidying-up of a loophole but a rather large fundamental change to the law of trusteeship with regard to charities. She may be right and there may be a good reason why we should do that, but I would prefer to see a bit more than one briefing from a think tank—if that is not to damn today’s discussion—to say that this is necessary. It is actually a very big transformation of the way in which we organise charities.
Lord Hodgson of Astley Abbotts
My Lords, the Committee owes a debt of gratitude to the noble Baroness for giving us a chance to canter over this ground. As she says, this is controversial stuff but it is certainly worth the sort of creative thinking that she has just outlined.
There are a couple of public policy issues. The first is whether it is an issue for actual fundraising—a way to give more resources to the Charity Commission—but there are those charities for which you might have a second public policy idea; that is, if you made people pay they would behave better. You could use various policies to drive up standards of governance within charities. Some charities say, “What you don’t pay for, you don’t value”. Of course, as we know, a charity number is an exceptionally valuable thing to receive in the sense that it enables you to get local authority or central government funding or makes it possible for you to apply to grant-giving foundations that almost certainly will not even entertain an application from you unless you have a charity number. So there is the argument about how one might use an aspect of this issue to improve governance.
The challenge, of course, is how you levy it. We heard earlier today from the Minister that there were 7,192 new charities last year. Noble Lords can do the arithmetic, whether it is £10, £100 or £250. But unless it is going to be north of £100 for your initial registration you are not going to raise a significant sum of money. People will say that £100 is a great deal of money—maybe. Equally, you might say that if a charity starting out does not have £100 spare, its financial viability is a bit doubtful.
There is an argument about initial registration. I am less keen on things such as fines for late returns of stuff to the commission. If small charities do not do it, the problem of finding them and getting the money means that the administrative costs for the Charity Commission will almost certainly outweigh any money that is received. My particular issue, which came up in the evidence, was that if you set up a trust and you use a standard commissioning trust document, which is available on the website, that is fair enough; but if you want an all-singing, all-dancing trust deed because you are a wealthy bloke or a wealthy lady and you want a very specialised trust to reflect your own wishes, and you are going to send it down to Taunton to the Charity Commission to bless and it spends two or three days blessing it, I do not see why that should be paid for by the taxpayer. If you want your own special trust deed, that is fine—you are entitled to it—but there ought to be a cost-recovery basis for the Charity Commission to be able to get that paid back. That has a degree of fairness and equity that would be attractive and would raise a decent sum of money.
When I paid my visit to Taunton and talked to the people there, they said, “Well, you know, I get this telephone call from a law firm and they ask me a series of questions. I am virtually certain that they are writing down my words, putting it on their letterhead and sending it off to the client with a fee note attached”. There are issues there that need to be explored as part of the exercise that the noble Baroness was talking about. There is no reason why the taxpayer should subsidise the activities of law firms, however eminent and brilliant they may be.
My view is that in the end we shall move inexorably towards a hybrid funding model, under which the state will pay a basic amount for what one might say are the “must-have” tasks and the sector will pay for the “nice-to-have” tasks, such as help desks and the types of things to which the noble Baroness referred. If you talk to charities, there is a list of things that they think it would be helpful for the commission to provide. There might be a bit of argument about what is a “must have” and what is a “nice-to-have” but over time that could be sorted out by discussion and intellectual heavy lifting. The sector needs to show the way and that is a much better way for the sector to take charge and come up with some proposals.
That of course takes me to my last and most important point; namely, the attitude of the Treasury. It is no good my noble friend on the Front Bench thinking that this will happen, unless there is an absolutely cast-iron guarantee that the Treasury will keep its hands off it. If you raise a couple of million pounds or £3 million from the sector and the Treasury says, “That’s a brilliant idea. We will have £3 million off the grant”, the sector will be absolutely furious. How we get to the situation where the sector in good faith enters into a funding arrangement to help develop its own future and to have the right regulatory structure in which we all have trust and confidence, and how we get that level of commitment about which the sector can be assured—not just this year or next year but over time—is a very difficult issue, to which I am not sure that we have yet found the answer. For the sector to move forward with confidence and to think of new, creative ideas of the sort mentioned by the noble Baroness in her opening remarks, it will require us to find a way to unlock that problem.
Baroness Barker
My Lords, I too thank the noble Baroness, Lady Pitkeathley. The funding of the Charity Commission is a subject which anyone who has met its current chair for longer than about five minutes will have had raised. It is quite a complex issue. One of the most interesting points to arise from the investigation into the Cup Trust was the extent to which the Charity Commission was not, at that stage, aware of the cost of its own operation. At a time when every charity in the land has ruthlessly to look at the cost of its operation, it is only fair that the commission should do so, too.
I want to make three points. Clearly, the matter will not be resolved today but it is a useful contribution to the debate. First, the exercise of the commission’s powers is not in any way related to the number of charities which it has to regulate. In fact, it is rather disproportionate: a very small number of charities cause the most costs to the Charity Commission. Increasingly because of digitisation, most charities are dealt with in a low-cost and volume operation—there are just a few which are bigger.
Secondly, the noble Baroness, Lady Pitkeathley, was quite right when she said that it is the commission’s advice that is most valued. That is an area of work for which it receives no revenue at all. It is rather strange that this country has the most advanced charity legislation and regulation in the world, so much so that one would think we might be able to export it around the world to generate income. If I were setting up a charitable foundation in Russia, I would not want to register it there; I would want to do it here. Much as the previous Government set up an international commercial court in London, might the Charity Commission at some point look towards increasing its income by internationalising and commoditising what it does?
Finally, until the Charity Commission is willing to look to other regulators, such as the FCA, and to appreciate that it has common interests with them and to be less isolated in the way it pursues its function, it will inevitably always be running back to government asking for funding. As the commission has seen in the last few years, government funding is finite. The noble Baroness, Lady Pitkeathley, has raised some really interesting questions which the sector needs to think about but which the commission needs to start thinking about much more creatively than it has done before.
Baroness Hayter of Kentish Town
My Lords, all those who have spoken have made the case for the amendment moved by my noble friend Lady Pitkeathley: this review is clearly needed. The Charity Commission has itself published some interesting research, either this week or last week, which gives an interesting insight into the views of the public and charities themselves on the concept of charging for charity regulation. A significant proportion of charities do not presume that the costs of charity regulation should continue to be met entirely from public funds. The wider findings of the study indicate a public appetite for charities to be regulated effectively. This leads one to question whether the Charity Commission can do that without sufficient funding. However, the report also shows that charities and the public are rather split on how to fund regulation. As my noble friend has indicated and as the noble Baroness, Lady Barker, referred to, it is unusual for a regulator to be funded by taxpayers rather than the regulated community. We have the example of the FCA, but the Legal Services Board, the accountancy regime and the CQC are funded by their regulated communities.
The noble Baroness, Lady Barker, made the point about a regulator feeling part of the regulators’ community, sharing benchmarks and the whole of that attitude. She also drew on the point about user involvement. I have been a member of some regulators, and I chaired a consumer body of one of them. We benchmarked the different ombudsmen in various sectors. The Charity Commission is an ombudsman in that sense but this was a different issue. There was a feeling that it was a useful exercise not only in how they could compare themselves with each other, but also in how as their users we could influence how they were working for us. It would be nice if the commission could see itself in that environment.
Baroness Barker
Baroness Barker
My Lords, before we start to debate the matters related to social investment in Clause 13, I should declare an interest. I am one of the vice-chairs of the All-Party Parliamentary Group on Social Enterprise. The Committee will not be surprised to learn that many of the amendments that stand in my name have been put forward by Social Enterprise UK. It did so because it is the national body for social enterprise and has a direct interest in social investment. It conducts research on policy and Bill campaigns over the whole field of social enterprise, and social investment is very much at the heart of that. Social Enterprise UK chairs the Social Investment Forum, which is a network of social investment and finance intermediaries designed to keep money flowing around the social enterprise market. It therefore has a direct interest in the first ever legal definition of social investment. Perhaps because it is the first ever legal definition of social investment, there is considerable concern that the law should be right. That is not easy, because by its very nature social investment, as opposed to straight financial investment, is not easy to define.
Baroness Barker
I thank all noble Lords who took part in what was a very technical but extremely important discussion. It is important out in the field. It took me back several years to a discussion I had with a colleague who had been to visit a rather far-flung part of our charitable empire. We discussed whether or not the fact that some pensioners went on some of the holidays that were provided by the organisation was enough to make it so distinguishable from a travel agent that it might just be a charity. That is a flippant way of saying: it is very important for trustees to understand exactly what their powers are going to be. The intention of us all is to open up the social investment market and those who work in this field know that even the best of the social investment charities are very cautious and very conservative in the way in which they exercise their powers. We will not be doing the sector any favours if we allow there to be considerable doubt on the part of the trustees about where they are going to fall. So I very much welcome what the Minister said and, like the noble Lord, Lord Hodgson of Astley Abbotts—not my noble friend any more—I would be delighted to come and meet him, but we might be lawyered up when we do. I beg leave to withdraw the amendment.
Baroness Barker
Baroness Barker
My Lords, after that foray into the wider realms of charity law and purposes, we come back to the anorak stuff of social investment. As the noble Lord, Lord Hodgson of Astley Abbots, alluded to earlier, new Section 292C(2) sets out the considerations which charities must make before they exercise a power to make social investment, and it refers specifically to advice that they should take.
As we discussed in relation to the earlier amendments, there are two different sets of considerations which trustees will have to make. One is a straight financial assessment. I know that it is argued that some social investments are almost akin to the making of grants—they are very few, I would imagine—so a great deal of what most people involved in making decisions about giving assets to social investments are concerned with is the business case for doing so and the likelihood of return. It is therefore quite right that the subsection should place a strong requirement on trustees to obtain advice on that. I think that most trustees making a social investment would seek the advice of people who had relevant experience in business.
On how charities make a judgment as to what is a correct social investment, which is particularly relevant given what the Minister said in his response to the previous amendments, we are talking not only about charities being able to make investments which are seen to be socially good but about such investments being both socially good and in pursuit of their charitable objects. That brings an important level of complexity to this matter because many charities would see making an investment in the sort of work which they do as not only being desirable but having the potential to get them out of some of the financial deficits which charities are getting into. They would say that that was quite a complex thing to do, whether or not it fell under this legislation.
I understand what the Government are trying to do by saying that before trustees risk money, they should take early advice. There was some debate on subsection (2)(a), which states that before making a social investment charity trustees must,
“consider whether in all the circumstances any advice about the proposed social investment ought to be obtained”.
There was a fear on the part of some people that that might give people carte blanche to go ahead and make investments without taking advice at all. Perhaps the Minister might make clear whether the Government envisage that there will be circumstances in which charities go ahead and make social investments without taking any advice.
I turn to the point of my amendment. If the investment concerned is truly to be a social investment, an interested party ought to be the beneficiaries of a charity. That is so for two reasons. First, they ought to be the people who can talk about the social value of the investment being made. Secondly, for different reasons, the beneficiaries of a charity have a direct interest in determining whether or not a social investment would be the best use of the assets of the charity from which they would otherwise benefit. It is therefore not unreasonable for there to be a discussion that includes both them and other relevant stakeholders. In a way, this is supposed to add a bit of belt and braces to the social aspect of social investment. I beg to move.
Lord Cromwell (CB)
We would all agree in principle that the beneficiaries of a charity should surely be involved as far as possible. My difficulty is where it is reasonable. Who decides, particularly if an investment goes wrong, whether or not it was reasonable to have consulted them?
I turn to Amendment 20, which is in my name and that of the noble and learned Lord, Lord Hope of Craighead, who cannot be with us today as he is required elsewhere: I am sure that the Committee, like me, will be happy to know that he was today confirmed as the new Convenor of the Cross Benches. I declare my interests: I have worked for and with a number of UK and international charities for much of my life. Latterly, in about the last eight years, I have moved much more into the investment world, where I look after some quite substantial investment portfolios for clients that include charities.
I am going to take a slightly different approach from some of the other speakers, which may or may not make me popular. I shall approach this amendment in three steps: first, what happens currently; secondly, what I think the Bill as it stands would mean for trustees; and, thirdly, why I think the amendment is needed. So what happens currently? Much of what is called social investment already probably happens in two ways. The first is that some charity investors seek to use various degrees of what we might call “ethical overlay” to their investment portfolios. At its simplest that is an ethical portfolio, and you can buy them off the shelf. It might involve avoiding certain companies or sectors, and tobacco and arms are obvious examples of that. These are available now; you can buy them online as a private investor if you wish to, or a charity could do the same. A common difficulty, of course, is the divergence of opinion about what is an ethical investment; I do not propose to dive into that today as I suspect we could spend most of the evening on it.
However, the provisions of the Bill go well beyond this type of investing. Moving perhaps closer to what the Bill envisages, some trustees invest in projects or activities where there is an expectation of some element of financial return beyond mission-related benefits. I agree about “mixed motive”; I prefer “mission-related”—it is a case of potayto/potahto. One might cite social enterprises, revolving credit funds, concessional lending to development projects or just models of work that require an element of repayment by the beneficiaries to recycle the money and ensure that they treat the money that they receive responsibly.
Last week I chaired a group in Birmingham for the Prince’s Trust, which advances modest sums to individuals seeking to start their own businesses. These loans are repayable to the trust to fund further such work, and that is made very clear to the beneficiaries when they receive these loans. My view, however, is that realistically these types of projects fall within the spending activities of that charity rather than being classed as investments, for reasons that I will come on to—the “two pockets” approach that the Minister referred to earlier. Nevertheless, the 2006 report of the noble Lord, Lord Hodgson, showed that there is anxiety among some trustees about how such activities fit within their responsibilities to invest charitable resources prudently. His report suggests specifically that a fear that social investments might not be within these rules is holding back and inhibiting investment into them and that it should be put into law that social investments are in line with trustees’ responsibilities—something that most of us have touched on already today. The Law Commission came to a very similar conclusion in its 2013 report and the wording of this section of the Bill follows very closely what it said. It comes as little surprise that the Minister told us that it had drafted this section. I am also glad to hear that better guidance, associated with that, is on its way, because my first instinct on reading the Bill was that this might be better dealt with through guidance than law. However, I bow to the far greater expertise that has been deployed on that matter than I have to offer.
So far, so good, but there are four other aspects of social investing that cause disquiet for trustees. Simply passing a Bill to say that they can make social investments does not sufficiently address those. First, social investing is poorly defined. It lies somewhere between charitable spending on worthwhile activities and investing for purely financial return. It is widely covered elsewhere, particularly in the Law Commission report, where one witness stated that it is,
“an unclear concept and capable of being used by a proponent to mean precisely what the proponent wants it to mean”.
The Bill seeks to define it; we have agreed to discuss that point separately, on the head of a pin, so I will not elaborate further today.
The second issue is that the returns on a social investment can be extremely difficult to quantify. The old cliché that two economists in a room will give you three opinions multiplies exponentially in this sort of area. Measuring and attributing a numerical value to social benefits, which trustees are going to have to compare between, can produce a very wide dispersion of arguably equal returns, depending on which criteria you use, how you weight them and—let us be candid—how keen you are to promote that particular investment to whoever is listening to you on the other side of the table. The prospect of asking trustees to leave the realms of quantifiable financial return, which they could then use for good works, and enter the world of social, environmental and other forms of accounting puts off as many as the worries about whether they are entering into something they should not be doing. The whole idea ends up, very quickly, in the “too difficult” box or, as I suggested earlier, allocated to the spending committee, a topic touched on widely in the Law Commission report.
Thirdly, if social investing takes off as a significant asset class—and it is already well on its way—it is, inevitably, going to attract an increasing number of purveyors and advisers who want to attract funds, recommend certain types of investments or manage funds within them. That is no bad thing in itself, but only if it is properly regulated. If it is not, whole new areas of mis-selling arise, where social investments could be knowingly or just irresponsibly hyped to investors and trustees. The danger in that is exacerbated by the difficulty in calculating, quantifying and comparing returns.
Finally, the Bill gives the power to make social investments, but it does not look at the possibility that some charities themselves may well want to use this as a fundraising opportunity and market them to other charities or the public. Add to this formula a situation where a trustee is involved both as a trustee of a charity marketing a social investment and as a trustee being invited to invest in it and you can see the complexities. I have not put forward a specific amendment on that point but I urge the Minister to think about whether we could address it at the next stage in terms of enabling charities to use social investments to raise much-needed funds, without the hideous cost of compliance which will probably come with it, but at the same time restrain them from being overexuberant in doing so.
That brings me to my underlying concern and the reason for the amendment: in pretty much every case, charities that have traditional investment portfolios have highly regulated individuals managing those portfolios. I believe the noble Lord worked with the FCA—FSA as was—so he will have background on this but an individual recommending investments has to be very specific on the expected returns, the level of risk, the previous track record of this type of investment and the previous track record of the person, object or company providing it. You have to be able to evidence that you know your customers in great detail and that what you are recommending to them is suitable. That may not be the case in the world of social investment. Social investments may be more risky, more volatile, more concentrated and certainly less liquid—an important consideration for charity trustees with bills to pay—than what I might call mainstream financial investments. You can sell a blue-chip investment at the press of a button but if you are putting money into a 10-year health project in a developing country, pulling your money out halfway through because you need the cash is not only technically but reputationally and morally a very difficult place to be.
Lord Bridges of Headley
I thank the noble Baroness, Lady Barker, and the noble Lords, Lord Cromwell and Lord Watson, for their contributions. As to what the noble Lord, Lord Watson, has just said, I have said that I will consider a number of amendments. Obviously I am always looking for ways in which we can improve the Bill. Before I turn to the amendments, I too would like to put on the record my congratulations to the noble and learned Lord, Lord Hope, on his election as Convenor of the Cross Benches.
I thank the noble Baroness, Lady Barker, for drawing attention in Amendment 19 to the important role of a charity’s beneficiaries, as well as its wider stakeholders, in the process of good governance. Trustees would be well advised to maintain close contact with their stakeholders and to make sure that they understand the full range of views that such a broad group is likely to represent.
As to social investment, there is a clear duty on trustees to consider all the circumstances relating to the proposed transaction before deciding whether to take advice and from whom. The scope is deliberately wide and inclusive, such that if it is determined that beneficiaries or other stakeholders should be asked for advice, there is no impediment to this course of action. However, the breadth encompassed by the duty does not benefit from an enumeration of the range of possible advisers to whom trustees might turn. It might also lead to practical difficulties relating to identifying the relevant stakeholders, as well as ambiguity as to what is represented here by the term “reasonable”, a point made by my noble friend Lord Hodgson. I hope that the noble Baroness will be content that the aspiration and intent are there in the Bill and will feel able to withdraw the amendment based on this existing breadth.
With regard to Amendment 20, I thank the noble Lord, Lord Cromwell, for his extremely thoughtful and thorough speech, which I will read with care in Hansard. My understanding is that the amendment’s intention is to strengthen the duties of trustees relating to the financial characteristics of social investments, and in particular that they should make a comparison with any similar investments that are subject to a stronger regulatory regime and satisfy themselves that the proposed social investment is suitable. The intention, I understand, is to prevent any potential regulatory arbitrage whereby minimal mission benefits might be used as a pretext for making, in effect, financial investments that would not pass muster if they were pure financial investments.
I am in full agreement with the intention here: to ensure that where social investments are made, they are undertaken for the right reasons and with proper analysis of both the mission benefits and financial returns. It would clearly be of detriment to the nascent market in social investments if the social aspect were to be used as a fig leaf to pass off financial investments that would otherwise be unsuitable. So I thank the noble Lord for raising this issue. However, I do not believe that that would be the effect of the Bill.
Under the current law, when making a financial investment the trustees of a charitable trust must comply with three principal investment duties under the Trustee Act 2000: first, to consider the standard investment criteria—namely, the suitability of an investment and diversification of investments in a portfolio; secondly, to take advice unless it is reasonable not to do so; and, thirdly, to review the trust’s investments from time to time.
Sometimes, but not always, a social investment will be an “investment” under the Trustee Act 2000 and the three investment duties will apply to the social investment. The Law Commission reported:
“There was general agreement amongst consultees that the duty under the Trustee Act 2000 to consider the standard investment criteria (suitability and diversification of investments) created difficulties for trustees making social investments and should be removed, or at least tailored to suit social investment, but that the duties to review investments and to consider obtaining advice were appropriate”.
In relation to the first duty, the Law Commission said:
“A particular problem is the duty to consider diversification of investments, as part of the standard investment criteria. A social investment is unlikely to play a part in a diversified portfolio, because it is selected not with a view just to financial return but also for the mission benefit that it will produce. When compared with a mainstream financial investment, a social investment may carry a particularly high risk or it may be unjustifiably large within a charity’s investment portfolio (or conversely, unjustifiably small and disproportionate to the fixed transaction costs), and all the more so where the expected financial return is modest”.
The Law Commission concluded that the second and third duties were, with some modification, appropriate for social investment. The commission therefore recommended tailored duties which are set out in the Bill. It said:
“The new duties, being tailored to social investment, should apply in place of the duties imposed on trustees by the Trustee Act 2000”.
For completeness, I should say that in so far as there are any other duties on charity trustees in respect of financial investments, the Bill does not change them, so classifying a financial investment as a social investment would not change those duties. All the Bill does is exclude the Trustee Act investment duties if they would otherwise apply. It may be that the Trustee Act investment duties would not have applied to a social investment in any event. For example, if the charity takes the form of a company rather than a trust, the Trustee Act investment duties will not apply.
I return to the question of whether there would be any regulatory arbitrage; whether a social investment could be used as a fig leaf to pass off financial investments which would otherwise be unsuitable. The new duties are not less stringent for social investment; rather, they are tailored to social investment. The Bill has been drafted such that both sets of duties would generally produce the same result.
Tailoring the duties means that trustees do not have to try to shoe-horn a social investment into the Trustee Act regime for financial investments. The Law Commission reported that this approach,
“creates consistency between the duties that apply to financial investment under the Trustee Act 2000 and social investment, whilst properly catering for their differences”.
While in theory unscrupulous trustees might try to justify an inappropriate financial investment under the guise of a social investment, I do not think that they would succeed in this endeavour; the tailored duties should still produce a sensible result that showed the transaction to be inappropriate. Furthermore, the Charity Commission and the courts would be astute to shams; they would look at the substance of a transaction and if it is a financial investment, the trustees will be expected to comply with the financial investment duties. Taken as a whole, I believe that the Bill already contains sufficient safeguards in respect of financial regulation. In response to the good point made by the noble Lord, Lord Watson, about the FCA, I am happy to talk to the authority and to other financial advisers about this new power. I hope that the noble Lord, Lord Cromwell, feels comfortable about not pressing the amendment.
Baroness Barker
That was a useful go-round. This is a very complex subject and it is extremely helpful to get the Minister’s words on the record, not least because I am sure there will be court cases and legal challenges to the investment decisions that trustees make. Some of those investments will turn out to be losers, so it is important that we have on record as much as possible the steps that we believe it is right to expect trustees to take. As the noble Lord, Lord Hodgson of Astley Abbotts, said, this is different from straightforward financial investment. We cannot take a direct read-across from the work of organisations such as the FCA and put it into this Bill. None the less, it is important. I am glad to have established in the form of a statement from the Minister that one would reasonably expect trustees to have consulted with stakeholders and beneficiaries before putting some of their assets into this form of investment. I take his words at this stage and beg leave to withdraw the amendment.
Charities (Protection and Social Investment) Bill [HL]
Baroness Barker Excerpts(8 years, 10 months ago)
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Baroness Barker
Baroness Barker (LD)
My Lords, Clause 9, which gives the power automatically to disqualify somebody from being a trustee, was the subject of perhaps one of the most contentious of the joint scrutiny committee’s discussions. It was certainly the point on which we received the greatest variety of opinion and which led to some of the most intense arguments from a range of witnesses.
I think that there was general agreement that there are some crimes which are of such seriousness that they should lead to automatic disqualification and that no charity would wish to have somebody who committed them serving as a trustee. We are talking about someone who had been found guilty of crimes of the order set out in Clause 9; for example, making false disclosures and false statements, and disobedience to a direction of the commission on an application to the High Court.
However, the discussion which really brought home the disquiet in the sector was on whether terrorism offences should be a cause for automatic disqualification. Part of the reason why many people in the sector have sought to question these provisions in the Bill, when you might have expected them simply to agree, is some of the past views of the Charity Commission and the way in which they have been expressed. In October 2013 and in early 2014, the current chair of the Charity Commission made statements about the biggest threat to British charities being terrorism. That was a major assertion to make. At that time and since then, there was and has been little evidence of abuse of British charities by terrorist organisations.
The particular problem with those statements was that the Charity Commission chose to make them during Ramadan, which is the biggest charitable fundraising period for Muslim charities. That caused needless and great offence, and the back-draught has coloured people’s vision or view of the power which is now to be given the Charity Commission in Clause 9. That said, there is agreement across the board that there needs to be a tightening up of the grounds on which people can be disbarred.
However, lying in the middle of the clause is the regulation-making power for the Minister—it is the Minister for the Cabinet Office, not the Home Secretary, I note—to add by regulation to the list of offences for which one can automatically be disqualified from being a trustee.
We heard a wide range of views from the witnesses to whom we talked, from the commission being of the view that the provision was necessary for its regulatory functions through to organisations such as ACEVO, which felt that, on balance, the power should be on the statute book but was not likely to feature large in the life of most charities. None the less, there was across the board a sense that charities were being unfairly targeted by the Government, without much evidence that they should be, and that the provisions which relate to terrorism offences are very wide.
Lord Bridges of Headley
My Lords, I am grateful to the noble Baroness, Lady Barker, for her explanation of this amendment, which was typically reasonable and eloquent. Subsection (4) of new Section 178A, inserted by Clause 9, would enable the Minister by affirmative procedure to make regulations to amend the list of criteria for automatic disqualification by adding or removing an offence.
The Joint Committee that undertook pre-legislative scrutiny of the draft Bill recommended that there be a requirement for any such regulations to be consulted on. The Government agreed and made provision, in subsection (21) of Clause 9, for there to be a requirement to consult on draft regulations where they add an offence.
The Delegated Powers and Regulatory Reform Committee’s first report of this Session stated that the committee was satisfied with the delegation and level of scrutiny in relation to this power when it had advised the Joint Committee on the Draft Protection of Charities Bill. It recognised that the Cabinet Office may in future need to take urgent steps to specify offences that should result in automatic disqualification, and considered that the affirmative resolution procedure would provide an appropriate safeguard.
The DPRRC, however, has raised a question about the commencement of new Section 178A and any regulations made under it. The last Government’s response to the Joint Committee’s report on the draft protection of charities Bill stated that we,
“commit to ensuring that sufficient time would be allowed before the commencement of such provisions”.
I will, therefore, happily provide a commitment to your Lordships that a disqualification would not take place under new Section 178A in relation to a person previously convicted of a specified offence until at least two months after enactment of the section and, in all but exceptional circumstances, until at least two months after the date that any regulations are made under subsection (4). We would want to ensure there was sufficient time to notify charities of the new offences.
When the Bill becomes law, we will publish an implementation plan that will set out when the different provisions of the Bill will be commenced. This will include the timetable for commencement of the automatic disqualification provisions under new Section 178A. The Charity Commission has said that it is planning a wide-ranging communications strategy in order to give those affected by automatic disqualification a fair opportunity to learn of the relevant changes before they come into force. Where we undertake any consultation, we will ensure that it is compliant with the compact.
I know that the Lords Constitution Committee has also considered the power to add offences. Its second report of this current Session states that this power to add new offences is not explicitly constrained in its scope, so perhaps I can provide some assurances to your Lordships on how the power would be used, and address a number of the points made.
First, while it may be considered unnecessary, I should nevertheless point out that there are no plans to exercise the power. Its purpose is to enable Ministers in future to amend the list of offences as new criminal offences are created which may be identified as appropriate for automatic disqualification, or criminal offences currently listed may no longer be appropriate, meaning the list needs to be updated. The prospect of a power to amend the list of offences was raised in consultation last year and was generally well supported by respondents, provided the power is subject to the affirmative procedure.
It should go without saying that, in considering any new offence to add to the list, there would need to be a clear rationale for adding that particular offence. The offence would have to be relevant to a person’s fitness to act as a trustee. We would set that out in consulting on the addition of any new offence. That consultation is a statutory requirement. Of course, the safeguards of the public consultation and the affirmative resolution procedure in Parliament—a point my noble friend Lord Hodgson of Astley Abbotts raised—should also provide a significant measure of assurance.
I hope that I have been able to give sufficient assurances to your Lordships on how this power would be used, and invite the noble Baroness to withdraw her amendment.
Baroness Barker
My Lords, I thank the Minister for that characteristically considered answer. It was helpful to have this fleshed out and to have statements on the record from the Dispatch Box.
As I tried to indicate in my opening remarks, and as the noble and learned Lord, Lord Hope of Craighead, indicated on behalf of the committee, there is a widespread understanding in the sector that this is necessary. There is not such a widespread understanding, but perhaps some relief, that some charities may be able to use the provisions of this clause to deter unsuitable people from becoming trustees. That may well be a good thing. It is simply that, within the current climate and context of the debate about the nature of terrorism legislation and its ever-widening grip on our lives, those of us in opposition are beholden to pressure the Government on these matters to make sure that we are not being unduly punitive towards individuals for all the wrong reasons.
I therefore take the Minister’s explanations and I listened to what he said about the extent to which there will be public consultation. With that in mind, I beg leave to withdraw the amendment.
Lord Hodgson of Astley Abbotts
My Lords, having also been a member of the Joint Committee, I support the need for flexibility on this. I used the example at Second Reading of the Yazidi women who have been enslaved by ISIS and whom it is allegedly possible to ransom for $10,000. Clearly that money is going if not directly then indirectly to ISIS and these charities are faced with an incredibly difficult decision. On the one hand, morality drives you towards wishing to rescue these wretched women who are in a state of sexual slavery. On the other, there is the danger that if you do it, you may end up being prosecuted for the reasons that we have been discussing. I support the need to find some way through this thicket. Whether it is a DPP statement of guidelines or whatever else, I do not know, but we should not let it just ride through our Committee without having a real go at getting clarity as to how charities can operate, not only for the benefit of the individuals concerned but for the reputation of this country. Our soft-power reputation for making an important contribution to providing humanitarian aid in various parts of the world is important to us, and we need to spend time making sure that we maintain it.
Baroness Barker
My Lords, it is worth noting that this issue is not new. Anybody who can remember the 1970s knows that similar decisions had to be made then about whether charities raising money for organisations in Ireland were legitimate charities. I go back to the point raised by the noble and learned Lord, Lord Hope of Craighead, when he talked about reasonable excuse. If a charity is raising money in pursuit of its charitable objects, the question becomes how it pursues its charitable objects, not whether it is therefore deemed to be supporting terrorism. The Charity Commission, having raised the temperature around this issue, is under an obligation to work with the sector to come up with the guidance for charities, which is obviously necessary, on how they can pursue their legitimate charitable objects in the difficult parts of the world in which they have to work. This is not new, and it is not beyond the Charity Commission to facilitate an answer.
Lord Hodgson of Astley Abbotts
That is absolutely right. The noble Baroness did say that, but her amendment says, “All fundraising charities”. I know she slightly shifted the ground in the middle of her speech, and I accept that.
What, then, is the problem? There is reluctance in the sector to accept that every problem is everybody’s problem. There is a tendency to push the pea round the plate and to blame another sector, so the chuggers in the street blame the telephone collectors, who blame the direct mail people, and so on. They say, “It’s not our problem—it’s somebody else’s”. There is also reputational pride in individual charities: “We don’t do that sort of thing—other people do that”. Therefore there is a real need for the sector to understand that it is judged by the weakest link, and unless it takes steps to remedy it, the sorts of results the noble Baroness talked about will occur.
Secondly, there is a failure to see that the alphabet soup of regulatory bodies—the IoF, FRSB, the PFRA and the Charity Retail Association—is confusing to the public. They often appear to be acting quite separately; the FRSB’s report on Mrs Cooke said:
“Fundamentally, the FRSB Board believes that the IOF Code must be strengthened”,
as if they are completely separate organisations, way away from each other. It seems much neater to collaborate and work closely together.
There are three things that we should encourage the sector to do. The public need a single point of entry into the system—whether they wish to approach it by phone, by email or by letter—by which complaints or concerns can be addressed. All the bodies involved in charity fundraising regulation and all charities need to pool their sovereignty into a single charity self-regulating organisation, called, say, the charity fundraising authority. That would be tasked with producing national guidelines and model rules with which local authorities should comply. If they do not comply they should explain why they are not complying. They should also provide internal best practice rules for fundraising, in particular about things like passing on names of donors to other charities, because the Olive Cooke case was about the pressure built up by repeated approaches from charities. The Government need to oversee this, either directly or through the Charity Commission.
This will be a challenge to the sector, which has not found it easy to accept change and responsibility for one another. I accept and agree that the situation is not satisfactory and action needs to be taken, but I wish good luck to whoever takes it on and suggest that they pack a tin hat.
Baroness Barker
My Lords, I agree to a certain extent with what the noble Lord, Lord Hodgson, said. He has wrestled with this particular issue for the best part of six years now and he bears some of the scars accordingly. There is no doubt that the voluntary and charitable sector is acutely aware that this particular case has raised this matter to a point where it can no longer be ignored or shunted around between different bodies. Some noble Lords were present at a national event held by the NCVO two weeks ago, at which Sir Stuart Etherington stated in terms to the great and the good of the voluntary sector there assembled that they cannot dodge this issue anymore and that the voluntary sector has to come up with some strong self-regulation. If it does not, it will find itself on the receiving end of regulation from government.
It really is quite tough for the voluntary sector to do that, not least because the noble Lord, Lord Hodgson, is right: there are completely different types of organisations doing different things in different ways, which are all subsumed under the catch-all of “fundraising”. It is sometimes the bigger organisations—the multimillion pound organisations—that have the resources with which to emulate practice in the private sector, which is sometimes pressurised but which actually works. That is the problem: emotional appeals and pressure work.
Equally, very small charities that work locally and in a face-to-face way, raising small amounts, quite often have a higher level of ethical practice because they have to: they work in communities where, if they work even remotely unethically, they do not raise money. There are then those charities that operate in the middle, which sometimes are some of the most innovative organisations of all but which would be the ones that would fall foul of regulatory requirements, just because they do not have vast teams of people overseeing their compliance.
A fundamental problem for charities is that when they are open and transparent about their fundraising costs, they put themselves in the firing line for all sorts of comment. It makes them incredibly reluctant to do that—not because they want to deceive anybody but because the very same people who have taken it upon themselves, quite rightly, to criticise in cases such as this take the charities to task for doing that. You cannot run a compliant, ethical and effective fundraising operation on thin air. You cannot do it.
The noble Baroness is right to do her bit to up the temperature on the voluntary sector at this moment, but I am not sure she is absolutely right with the amendment that she has put forward. I believe that the voluntary sector should be allowed one last chance in the last chance saloon to put itself right. The noble Lord, Lord Hodgson, is also right that there are too many different bodies all hovering around the same thing, clogging up the decision-making, and there needs to be a rationalisation of that. I would suggest that there should be a time limit, say of a year. If the voluntary sector does not come forward with a new code of conduct within that year, the Government would be absolutely right to step in at that point and exercise their powers.
Lord Bridges of Headley
My Lords, we are all understandably concerned about the reports of the fundraising activities used by a small number of charities. There is certainly no complacency on behalf of the Government on this issue; the debate and the possible disagreement are over what should be done. I hope, as the noble Baroness, Lady Barker, just said, that the self-regulatory bodies note the fact that everyone wants action to be taken and to be taken soon.
Last week my honourable friend from the other place, the Minister for Civil Society, Rob Wilson, addressed fundraisers and made it clear that the clock is ticking for them to get a grip on self-regulation. He said:
“I am giving selfregulation an opportunity to demonstrate it can work effectively and make the short term and long term reforms necessary. I urge you to take that window of opportunity seriously as the window may not remain open for much longer … Change is essential. You should embrace it and lead it, rather than wait and allow others to do it for you”.
The noble Baroness, Lady Hayter, cited a report in the Daily Telegraph. The Daily Telegraph is obviously a fantastic newspaper but I would not believe everything that I read in it. I am not sure where that particular date has come from, but I should stress that, as I have said, self-regulatory bodies have a relatively short opportunity to demonstrate that they are getting to grips with self-regulation.
It has been less than two months since poor fundraising practices were thrust into the media spotlight following the sad and tragic death of Olive Cooke. The extent to which she was influenced by poor fundraising practices is not entirely clear, but the issue, as the noble Baroness so rightly said, has clearly struck a chord with the public. Since then there has been a steady stream of media reports about unacceptable fundraising practices—whether direct mail, telephone fundraising or door-to-door fundraising.
As I said, I think almost everyone agrees that there needs to be change. The question is what change and who should lead it. It strikes me that there are three questions that need answering: first, whether the standards fundraisers have set themselves are high enough; secondly, whether the structures for self-regulation are the right ones; and thirdly, whether fundraisers and the charity trustees who oversee them accept the need for change to ensure that donors are treated with honesty, respect and decency.
On the first question, whether the standards for fundraisers are high enough, the answer is a clear no in relation to some fundraising practices. That is why the Minister for Civil Society met the regulators at the beginning of June and set them a challenge to improve standards in a number of areas. This work is continuing but it must bear fruit.
I welcome the announcement by the Institute of Fundraising, on 24 June, that it is strengthening its code of fundraising practice by requiring door-to-door fundraisers not to knock on doors that have a “no cold calling” sticker. However, that is something it should have done proactively some time ago. I know that several review groups have been established and are looking at various issues, including options for opt-in and opt-out, frequency of contact, and whether there can be a one-stop shop for people who want to come off all fundraising contact lists.
Lord Hodgson of Astley Abbotts
The danger about moving as the noble Baroness says is that when in two years from now there is a charge from the Government for regulating the sector, there will be an enormous outcry, so what looks attractive to begin with will be inflexible, expensive and even more unpopular than the present system. It would be better from every point of view, accepting all the points about vulnerable people, if the sector could be persuaded to take up the challenge, find the will, find the money and make it happen, because it will make it happen in an effective way. The problem at the moment is that it has not really accepted that there is a fundamental problem and thinks that if there is a problem, it is not its problem but somebody else’s.
Baroness Barker
My Lords, I would like to follow that up by saying that I think that the noble Baroness, Lady Hayter, is absolutely right that one of the big issues—in this field in particular, but it is a big issue right across our society that we have not got to grips with—is how we will include people with dementia in all sorts of aspects of our life. This is true in terms of the NHS, and social care, and here.
The voluntary sector ought to be the one place in our society where we can go and talk to the Alzheimer’s Society and ask what a proper code of conduct and practice might look like. It is self-evident from what the noble Baroness, Lady Hayter, said, that the commercial sector has not got this right yet. Organisations such as banks are the bodies in our society that should be at the forefront of dealing with transactions with individuals, even more than government. Banks have millions of transactions every day with millions of individuals, including older people. They clearly have not got it right. We should have one go in our sector at getting it right for everybody else. If that does not work, then by all means go down the route that the noble Baroness wants to go.
Baroness Hayter of Kentish Town
It is clear that the distance between us is very small. My worry concerns the idea that we will not have another charity Bill in this Parliament. If I had an absolute commitment that we would have another Bill in two years’ time, so that if we had not done it we could do it then, that would be fine, but my fear is that this will be the only such Bill and this is the chance that we should take.
Having said that, I agree with a lot of what the Minister said. In terms of his plea—or threat; I do not know—to trustees to take a more active interest in this, his words were well chosen. The words from the noble Lord, Lord Hodgson, on a single point of entry were very good, too. However, there must be some way of overseeing that it happens. Even if the noble Lord, Lord Hodgson, does not want to come back with a suggestion on Report, we will try to see whether there is a way that puts an extra little voomph—sorry, Hansard—behind this, so that we do not have to wait. The real problem is that we had to wait for Olive to know that this was going on. That showed the Fundraising Standards Board that it was not just a matter of standards but a matter of enforcement. One disagreement that I have with the noble Lord, Lord Hodgson, is when he says that it will be very expensive. I think that some money must be spent on this, because the Fundraising Standards Board, even if it is still self-regulated, must do some monitoring, and that always costs money. If we do not do that, the long-term problem will be that we no longer have this very precious sector, which I think all of us agree is one of the great prides of this country.
Having said that, we will seek a way to come back that gets maximum support. For the moment, I beg leave to withdraw the amendment.
Charities (Protection and Social Investment) Bill [HL]
Baroness Barker Excerpts(8 years, 10 months ago)
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Baroness Barker
Baroness Barker (LD)
My Lords, good afternoon. I welcome the noble Lord, Lord Bridges, to his first Committee. No doubt he has been briefed extensively and told that these are occasions on which their Lordships are allowed to do absolutely anything they like. I think this is the point of maximum terror for the spokesperson, although I am sure we will treat him gently.
This might well seem the most pedantic amendment that noble Lords have ever seen but we are dealing with charity law, are we not? Let us start as we mean to go on. However, it is a rather important amendment. I want to start the Committee’s deliberations by trying to ensure that, throughout our proceedings, we do not stray into the realms of viewing this legislation simply in terms of the extent to which it adds to the arsenal of weapons at the disposal of the commission and without thinking of the impact that some of these measures can have on trustees.
When some of us undertook the work of the scrutiny committee, under the able chairmanship of the noble and learned Lord, Lord Hope of Craighead, we were presented with witnesses who were, by and large, people with professional interests from around the charity world. At times, we rather lost the sense that on the end of this legislation will be individual trustees, the majority of whom we know are perfectly decent and honest. Just a few are not.
On the committee, we considered at some length whether this power to issue a formal warning was really necessary. In the end, we were persuaded that on balance—it was on balance—perhaps the Charity Commission could make fair and good use of it to issue a warning rather than open a statutory inquiry and go through all that that entails. Simply having the power to issue a warning to trustees where it was considered that the actions in which they were engaged presented a fairly low-level risk to the charity or to charities in general is absolutely fine. I agree with that. However, it is still a public warning. It is still something likely to cast a shadow over, if not leave a stain on, a person’s reputation. The majority of trustees hold the commission in very high regard. They take very seriously the actions of the commission. For the majority of trustees the prospect of a public warning would actually be quite difficult for them personally if not professionally.
We deliberated long and hard, and were influenced a great deal by the wisdom of the noble Lord, Lord Hodgson. He argued that this was meant to be a proportionate response to very minor misdemeanours, albeit recurring ones, and because this is not meant to be a draconian power, we should not allow an appeal mechanism, making the process a bureaucratic nightmare. I agree, but that makes it all the more important that trustees are alerted in good time that they may be the recipients of a warning, giving them a chance to put right their failures. That is what this power is supposed to be about—the prevention of fairly minor misdemeanours.
For that reason, it is important to ensure that people know where and when the warning will be published. It is one thing for a notice to be published on a part of the Charity Commission’s website, where only those of us who are sufficiently intrepid or boring to make our way will find it. It is quite another for it to be published prominently somewhere in a local paper, for example—if local papers still exist—in an area in which the charity operates. That could have quite a profound and damaging effect on the charity’s reputation.
In putting this apparently small and fussy amendment before your Lordships, I am trying to echo the points made by the Charity Law Association which thinks that trustees ought to be given fair notice that they will be subject to this so that they can try to put matters right. If we do that, this power will serve to act in the preventive way that was envisaged rather than being a rather heavy-handed hammer to crack a nut. In that spirit, I beg to move.
Lord Hope of Craighead (CB)
My Lords, there is a great deal that the noble Baroness, Lady Barker, said with which I agree. Perhaps I can take this opportunity to pay my own tribute to the work that she, along with other Members of your Lordships’ House who are present, did on the committee. There is a great deal of force in her point about the importance of the notice that is being given to trustees as to what the Charity Commission wants to do with regard to publication. However, I have a concern about the removal of the word “how” and the substitution of the words “when and where” for this reason: when you think carefully about what the words really mean, the effect of the amendment is to narrow the amount of the information that is required by the provision. There are other things built into the word “how” which are not there—the manner in which this is to be done, and how often, are two examples. One point that the Charity Law Association raised with us and is in a memorandum it sent to us in connection with the Committee stage of the Bill is the element of publicity itself and whether anonymity is to be given to the trustees who are the subject of the publication. If one restricts the amount of information simply to “where” and “when”, it leaves out the possibility of further inquiry as to the precise way in which this is to be done.
I appreciate the word “how”. After all, a three letter word seems very weak but, if you think about it, it is actually quite a powerful word because it embraces so much within it. If you read that together with what is in subsection (6) which enables people to make representations as to “how”—I repeat the word “how”—the publication is to be done, one can see that it gives scope for a good deal more inquiry.
I have huge respect for the noble Baroness, Lady Barker—I am entirely in sympathy with what she is seeking to do—but I would respectfully suggest that “how” is probably the best word to use. If it is to be replaced by something else, then there would need to be more in it than simply “where” and “when”. I find that a little untidy, which is why I suggest that we leave the word “how” as it is.
Baroness Barker
My Lords, I thank noble Lords for the range of contributions, which showed just how important a three-letter word can be. I say to the noble Lord, Lord Watson of Invergowrie, that I speak Scottish as well. It is a good job that the word “aye” is not written into legislation very often because it has a multitude of meanings.
I thank the Minister for his response. I proposed this amendment for two principal reasons. One was picked up by the noble Lord, Lord Hodgson of Astley Abbotts. When one works with charity trustees, as I have done a lot, it is not unusual for the administration and so on to take much, much longer than it would in, say, a commercial firm. Simply because people are volunteers, processes take time to complete. Whenever I drew up things such as grievance and disciplinary procedures, I used to look at people who had grievance procedures and had taken them either from a local authority or from a standard suggestion by lawyers. The timescales were longer because things just took longer to do. The noble Lord, Lord Hodgson, is right that it is necessary to have something that concentrates the minds of trustees. It is important that they say, “We have to sort this by this date or else this warning is going to be issued”.
There is a second reason why I thought it important to put the amendment forward. The Minister said that the Charity Commission would, after a period of time, remove notices and archive them. However, these days, given the development of the web, the issuing of a statement is irrevocable—it is there for ever. I therefore think that it behoves us all to be slightly more careful than we might otherwise have been in the days when things were issued solely on paper and could be torn up without anybody knowing. We need to be that bit more careful about the way in which we pursue these matters.
I bow to the assessment of the terminology given by the noble and learned Lord, Lord Hope of Craighead. I understand the inclusivity of words which lawyers love so well, but I rather favour the suggestion of the noble and learned Lord, Lord Scott, that we should perhaps think about putting all three of these words together. It seems that if the Charity Commission is to exercise this power, it needs to give the utmost consideration to how it communicates with trustees. The one thing that a charity and a charity trustee must value above all else is their reputation. That is the thing that is most vulnerable to attack.
I thank noble Lords for taking part in this debate, which I hope they think was useful, and for the moment I beg leave to withdraw the amendment.
Lord Hodgson of Astley Abbotts
My Lords, I would like to focus on Amendment 2. I do not doubt that it is an exceptionally well-meaning amendment. If that sounds patronising, I do not mean to be at all; I think that it is very well meaning. We have all been horrified by the Jimmy Savile cases and the other cases of that nature, and we all want to do everything we can to protect children. The easy option is to say, “Absolutely, we should agree to this”, and that would avoid the by-product that one might be accused of being careless about the safety of children.
However, this afternoon I shall resist that temptation and ask my noble friend to reject the amendment. I do so on three grounds: those of efficacy, proportionality and impact. I want to say a word about each of those in turn but, before doing so, I draw the Committee’s attention to the fact that, before doing the charities review, I produced another report for the Government on what stopped people volunteering—what stopped people giving money and their time. The report was called Unshackling Good Neighbours. I took a lot of evidence from people about this and I should like to refer to some of it.
First, on efficacy, there are not many good outcomes from the terrible saga of Jimmy Savile and other prominent people, but one is that now the doziest trustee of the sleepiest charity is aware of CRB vetting and barring, as well as the legislation and the importance of complying with it. That is for two reasons: first, the risk to trustees themselves if they fail to do so; and, secondly, the risk to the charity they represent. We were talking about fundraising. The rows that there have been over unauthorised fundraising will be as nothing compared with the damage to a charity’s reputation if it is shown to be light-handed over the need to check its volunteers as appropriate.
The evidence that I had when preparing the Unshackling Good Neighbours report was that screening to prevent undesirable individuals becoming involved with children or vulnerable adults is now pretty fine. Indeed, if I heard the noble Baroness aright, the example that she gave was from 2010, about five years ago. We learned that the dangers, such as they were, were not so much within the institutions, because these undesirable people go where the softer targets are. They know that they are going to be checked if they work in schools with vulnerable adults, so the dangers are outside the school gates and, above all, on the internet, and that is where society needs to apply the pressure to ensure that our children are safe. Therefore, at the moment I do not see why this amendment would add to the efficacy of the vetting and barring arrangements vis-à-vis charities.
Secondly, on proportionality, vetting and barring legislation has nothing to do with charity law. It is the statute on its own that needs to be enforced. Vetting and barring is to do with a well-run organisation, whether it is a charity or not, but it does not particularly apply to charities. I think that government departments and the police need to enforce their own legislation and not pass it around, trying to find somebody else to do the checking for them. I am always concerned that if more and more is passed to charity trustees, fewer and fewer people will wish to take on the risks and responsibilities of what appears to be becoming a very one-sided state of affairs. If, as I believe, the mesh on the screen is pretty fine, should we be imposing another specific role on the Charity Commission? It should do it anyway, and in any case it has the powers to ask for this. The commission is already stretched. Vetting and barring is a role that is not part of charity law and there is already an established enforcement procedure for it.
If we are concerned about the situation with charities, why are we concentrating just on vetting and barring? Why do we not include health and safety? That, too, is very risky for people. Without sounding too flippant about it, a school headmaster whom I talked to said, “Actually, if you want to safeguard children with a new level of screening, the best way is to make sure that everybody everywhere drives at below 30 miles an hour, because that is how most children are injured”. Therefore, I think that proportionality is the second important issue.
The third is the question of impact. Surely our shared objective must be to encourage as many of our fellow citizens as possible to become involved in our civil society and to volunteer. It may be strange to the Committee but many potential volunteers find vetting and barring legislation intrusive, especially in the way that it is implemented and shows a lack of personal trust. The law says—I think that the Minister will put me right if I have got this wrong—that it is a question of frequent and intensive contact. Nervous trustees interpret those words pretty widely, and amendments like this will increase that nervousness and increase the likelihood of wholesale vetting and barring checks even when they are not needed.
One of the examples that I received was from a retired doctor living in the north of England: she was 65 and wished to do some work reading to Alzheimer’s patients. She was required to carry out the CRB vetting and barring check. She said to me, “Look, I’ve been before the GMC now for 35 years and if you can’t trust me now, what else do you require from me? I’m not going to do it as a matter of principle”, and she did not. That seems to me to be a shame. It is important that we do not allow this to become out of all proportion.
I have a second example, from a lady who got involved in a Manchester drama group. She was required to be checked and was happy about that but, she says,
“having been approved, we were invited to a session with the local child protection officer. I came away from that meeting with a number of very serious questions as to whether I should get involved with this sort of group. The talk left me feeling I would potentially be placing myself in situations of real risk. The child protection officer focussed the session on ensuring no adult put themselves in a vulnerable position e.g. if a child requests to go to the toilet—in no circumstance should an adult accompany them. If a child (with particular reference to girls) falls and cuts her knee, whilst wearing tights—under no circumstances should any adults remove the girl’s tights and help stem the bleed. No adult, whatever sex, should ever be alone with either one or more children. Needless to say, I came away from the session questioning the sense in many of the messages conveyed. As a caring responsible adult … I did not feel at all comfortable with the prospect of not being able to help an injured child”.
In accepting the spirit of the noble Baroness’s amendment, we have to be prepared to step back from this issue and accept that there is another side, however difficult it is to interpret. Why does this matter so much to us? All of us, particularly as parents, are of course horrified by child abuse and wish to stamp it out. Less attractively, however, there is an industry out there that actually profits from CRB vetting and barring checks. If noble Lords receive the same emails that I do, they will have had one today from one of the agencies that provide vetting and barring checks saying, “If you get checks through us for the next month, we’ll put £1 of the check cost towards charity because our chief executive’s going to run a marathon”—a way of appearing user-friendly. That is fine, but they are not going to tell us that fewer checks are needed; they will tell us that we need more. Some of the big charities have vetting and barring sections, and they too—after all, it is their job—are going to say, “We need more checks and more emphasis on them; that is the right way forward”.
I am not so sure. I think that right now the mesh performs its task pretty well. Is it perfect? Of course not. Whatever the size of the mesh, though, there will be failures, and when they happen we shall be told by someone that if the mesh had been finer we would have caught the person in question, and that will be very hard to rebut. Still, we need to stand back now and not impose further responsibilities on the Charity Commission that, as a by-product, may reduce the willingness to volunteer.
Baroness Barker
My Lords, I wonder if I might ask the noble Baroness, Lady Hayter, a question about her Amendment 11, which, as she explained quite clearly, deals with children. A lot of my work with charities is about vulnerable adults. In fact, the noble Lord, Lord Hodgson of Astley Abbotts, is right: if there has been any silver lining to the horrors that have been unveiled over the last five years it is that there is now a much clearer focus on the need to protect children in all settings. That includes in charities.
The law governing abuse of vulnerable adults is much less robust. If one were to think about this in a strategic way, the increase in dementia that will happen over the next 10 to 20 years, barring the discovery of an effective medical treatment, means that scope for abuse of older people will be far greater than it is now. That is something to which good charities—there are many of them—are alive. They put in place robust procedures with their staff and their volunteers. I happen to think that it is no less serious than abuse of children. If I have an objection to that amendment it is that omission.
Baroness Hayter of Kentish Town
I believe we are still on Amendment 7. I will deal with that when we come to Amendment 11.
Baroness Barker
I am sorry; I thought that they had been grouped together. I apologise to the noble Baroness.
Lord Hope of Craighead
My Lords, I will say a word or two about Amendment 7, which seeks to add a new “case K”, where:
“P has been found guilty of a sexual offence or has been placed on the sex offenders register”.
I will sound a note of caution about this amendment, for a variety of reasons.
The previous cases listed, some of which are the subject of other amendments, deal with incidences of dishonesty, failure to observe court orders and things of that kind. They cast doubt on the probity of the individual managing trust funds and are reasons for thinking that there might be some mismanagement of the funds. Indeed, terrorism is added, for reasons that we all understand. What is being introduced here is something that is not generic to the others, although it deals with an undoubtedly very disturbing social problem, which is people who abuse children, although it is not confined to child abuse, which I will come back to in a moment. There is a question of whether it is right to bring other criminal offences into the automatic disqualification field. One can think of other cases—extreme violence, for example. Crimes of violence are not listed here. There may be other crimes of a kind that society would regard as repugnant, but they are not listed here either. I have some doubt as to whether it is right to put the sexual offences chapter into the automatic disqualification field.
There are other reasons for being concerned about the wording. There are two chapters here. First, there is being found guilty of “a sexual offence”. There is no qualification as to how serious that offence may be. Anything that falls within the broad chapter of sexual offences would be included here, some of which may not require or justify a sentence of imprisonment at all. Then there is “the sex offenders register”. The position is that a person is placed on the sex offendering register as a matter of law if a sentence of 30 months or more is passed. So far so good: you are dealing with the more serious categories to justify being put on that register, but the initial part—conviction for “a sexual offence”—does not include everything.
There is a feature of the register that has been cured by order, but which caused concern in a case on which I sat in the Supreme Court. An 11 year-old boy who had committed a sexual offence—a very serious one, because he was sentenced to more than 30 months’ imprisonment or detention—was placed on the register. As it stood at that time, in 2010, the presence of his name on the register was without limit of time. It is an indefinite feature.
Lord Hodgson of Astley Abbotts
My Lords, I was slightly surprised to see that the noble and learned Lord, Lord Hope of Craighead, was not going to rise to his feet to take us through the significant words “any serious incident”, as serious incidents obviously can be in the eye of the beholder, the second point,
“results in, or risks causing”,
which requires one to take a view of the future, which is also quite demanding, and the definition applied to “significant harm”. I wonder about the wording of this amendment, which I think would have a pretty chilling effect on trustees and might well lead to them ringing the Charity Commission with inquiries about the nature of particular incidents and whether they qualified under this quite broadly drawn clause, or indeed might lead to a rash of reports to the Charity Commission, which may or may not be a good use of the commission’s time and energy to follow up.
For my part, I go back to my wish to expect trustees to behave responsibly and for the Charity Commission to check them, but not to impose other and further duties. I drew a different conclusion from the noble Baroness about the Charity Commission’s guidance on its website, which seems to be a much better way of dealing with this than putting it into statute. The charity’s trustees would have to be aware of that guidance and follow it. I think that the noble Baroness was slightly unfair to the commission about the order in which it has rated the different offences. Just because child abuse comes a bit further down the list does not mean that it is considered less important; I do not think that is a fair conclusion to draw. It is more important that we should have flexible guidance and that the Charity Commission empower trustees. We should not impose in statute quite wide-ranging and imprecise duties that will be a further reason why people do not want to act as a trustee.
Baroness Barker
My Lords, I say to the noble Baroness, Lady Hayter, that I do not think anyone in this House feels that the whole matter of child abuse has been done and that there are no more protections to be had. There is a question about the extent to which we need to change the law as opposed to the extent to which we need to give advice and change practice within organisations. I rather think that large organisations, such as the BBC, and indeed small organisations, are very far from having fully worked out their response to the revelations that have come out over the past couple of years.
I, too, take the point made by the noble Lord, Lord Hodgson: I think that the order in which things appear on the Charity Commission website, to be fair to the commission—and we are not always very fair to it—is as much to do with history as with anything else. In the time of Anthony Trollope, financial misdemeanours were at the forefront of the commission’s mind, not child abuse. I really think that the climate has changed. I shall not repeat the arguments that I made about older people under the previous group, because I misread the groupings, but I take the point about the protection of vulnerable adults.
I wanted to ask the noble Baroness about her Amendment 11—and perhaps the Minister might help with the answer to this—and the power to disqualify all trustees of a charity. My understanding is that it is a basic tenet of charity law that trustees are jointly and severally liable for decisions that are made or for failures within the charity. So I am surprised to learn that trustees can be removed only as individuals. I should have thought that their joint and several liability would mean that, if something as bad as the examples given by the noble Baroness were to happen, the whole board of a trust would be equally affected by it and would therefore they would all be removed. But maybe my understanding is slightly out of date.
Lord Scott of Foscote
I entirely support the amendments proposed by my noble and learned friend Lord Hope for the reasons he has given. As he said, in the Oxford dictionary there are two alternative definitions of the expression “privy to” and neither would be appropriate in this part of the Bill. On,
“sharing in the secret of a person’s plans”,
I suppose that spouses share in the secrets of the plans of their partners, but that does not make them people who ought to be subject to the provisions of this Bill. The other meaning is,
“a person having a part or an interest in an action, matter or thing”.
“Interest” is not appropriate. The substituted words suggested by my noble and learned friend—“participated in”—seem much better and should be accepted.
Baroness Barker
My Lords, as a member of the committee, I want to support the noble and learned Lord, Lord Hope. I love going to Hampton Court. When you go there, particularly if you are a kid, you get to understand how this term came to be. We are not in Tudor times but it is a very important matter. A number of the charities we talked to in the course of our discussions work internationally. They work in very difficult situations, such as in war situations around the world, and at times it can be quite difficult to ascertain the extent to which the trustees know what is happening in their charities.
On the last set of amendments, the noble Baroness, Lady Hayter, tried to take us to a place where we could understand the difference between management and governance. We are talking very much about governance here, not about the people who run or manage charities and are therefore close to the day-to-day activities of those charities. If the question is about the extent to which trustees in a position of governance need to know what is being done by their charities or can inadvertently be assumed to have known that something adverse happened, then that is absolutely wrong.
I am always interested in things that clarify governance for trustees. Governance is very difficult to pin down. This change of language is an attempt to help the trustees of today understand that distinction between governance and management, and that is laudable.
Lord Watson of Invergowrie
My Lords, I start by saying that the Opposition support these amendments as well. One of the issues arising among a number of organisations in response to the Bill is that it lacks clarity in various ways. If one of the more straightforward means of overcoming some of that lack of clarity is changing the wording as suggested here, then we should all welcome that.
The noble and learned Lord, Lord Hope, mentioned the recommendation of the Joint Committee and that the wording “aware of” was suggested. In response to the committee’s recommendations, the Government stated in their report of March this year:
“The Government will explore implementing the Committee’s recommendation to replace ‘privy to’ with ‘aware of’ with Parliamentary Counsel. The term ‘privy to’ is already widely used in the existing legislation and we want to carefully consider the implications of any change before committing to a change of wording”.
Following that consideration, the Bill was not changed and, of course, “privy to” remains in it.
The noble and learned Lord, Lord Hope, told us why he came back with amended wording. My only thought on the matter is that a former Law Lord’s understanding of the law would be something to which I would give weighty consideration—to put it mildly. Can the Minister say why, and indeed whether, Parliamentary Counsel continues to believe that that wording is right? This is a fairly straightforward change that should be made to the Bill.
Baroness Barker
Baroness Barker
My Lords, I shall speak also to Amendment 10. I hesitate to suggest this, but these are perhaps two of the most substantive amendments before us today. During the work of the pre-legislative scrutiny committee, it became clear that there was broad agreement that the commission should have the power to disqualify some people from being trustees. Furthermore, there was agreement that there should be an automatic power to disqualify some people from being trustees. We listened to various people from all around the sector, who agreed on many of the measures in this Bill that we might not debate in great detail, such as the power to disqualify someone who might well have evaded disqualification because they had already resigned. There was a general consensus that the commission needed more powers to disqualify unsuitable people to ensure that the reputation of individual charities, and charities as a whole, was upheld. However, we also heard that by and large trustees are overwhelmingly, for the most part, honest people who very occasionally, in rare circumstances, make mistakes, and in even rarer circumstances commit criminal acts. It was against that background that we deliberated the powers in the draft Bill.
The two elements of the draft Bill that received the widest criticism of all were the conditions under which these powers would be exercised, which are the subject of these two amendments. In Clause 3, the range of conduct to be considered by the commission when exercising its powers to disqualify includes many with which we would have no quarrel whatever, where people have been found guilty of misconduct and mismanagement. The point on which there was the most discussion and disagreement among the witnesses who came before us was Clause 9(3)(b)—that the commission could take into account not just a person’s conduct in relation to the charity of which they had already been deemed guilty of mismanagement and misconduct such that an inquiry had been opened but,
“any other conduct of that person that appears to the Commission to be damaging or likely to be damaging to public trust and confidence in charities generally or particular charities or classes of charity”.
So, any other conduct at any time or in any other circumstances. That is a very wide power, and it is one that has drawn criticism not just from bodies that exist to champion charities, such as ACEVO, but, most significantly, from the Charity Law Association working party, the body of charity lawyers who have spent a considerable amount of time working on this. The association agrees that the commission should have this power but, if it is going to have it, there needs to be clarity and transparency about how it would be exercised. Any trustee who found themselves subject to the power would then clearly understand the evidence that was being used to come to a judgment about them.
The government response to the draft report noted that the commission was already required to produce a statement of reasons under Section 86 of the Charities Act 2011, when it exercises its compliance powers, but noted that it would explore whether an amendment to the Bill was needed to make this clear. There has not been any such amendment. So in introducing this probing amendment, I wish to discuss and get on the record some of the criteria that would be used.
As the Minister said in the debate on the previous group of amendments, the Charity Commission has produced a draft policy paper on how it might use this proposed power to disqualify people. Eventually perhaps the commission could get round to sending it to those of us who were members of the Select Committee and who are discussing the Bill. It is a guidance paper that is comforting in that it makes a series of heartening statements, particularly in relation to Clause 10, but it raises a number of problems too. As the Minister said, the power to disqualify in the new sections introduced by Clause 10 comes in three parts: somebody has to have been guilty of one of the conditions labelled A to F as set out in new Section 181A(7); the person is unfit to be a trustee; and the order to disqualify somebody is desirable in the public interest in order to protect public confidence.
I cannot take exception to conditions A, C, D and E. Condition A states that,
“the person has been cautioned for a … offence against a charity or”,
in the administration of a charity, for which the conviction would be automatic disqualification. Condition C is that,
“the person has been found by Her Majesty’s Revenue and Customs not to be a fit and proper person to be a manager of a body or trust”.
Condition D states that the person was,
“a trustee … officer, agent or employee of a charity at a time when there was misconduct or mismanagement”,
and the person was responsible for, contributed to or facilitated the misconduct or mismanagement. Condition E is that an officer, employee or corporate trustee was responsible for, contributed to or facilitated misconduct or mismanagement of a charity. I do not think anyone would think that any of those would be a reason not to disbar.
The problems lie in conditions B and F. Condition B has already been the focus of some discussion and will be so again. Under that condition, which is in two parts, where a person has been convicted of an offence in another country that is against, or involves the administration of, a charity or a similar body, the person would face automatic disqualification from acting as a trustee if—this comes in the second part—the offence would have constituted a disqualifying offence if committed here. In the Charity Commission’s policy paper there is no “and” or “or”. There is no interrelationship between those two parts; they are just stated as bullet points.
I have a question for the Minister. If someone who is active in parts of the world where gay people are persecuted is found guilty in a court of law of breaking the law of that country and then comes to Britain, would they be barred from being a trustee of a charity? After all, they broke the law in their own country. If someone was found guilty in Russia of breaking the law under that country’s increasingly draconian laws against NGOs and charities, would they then be regarded in this country as ineligible to be a trustee of a charity under this provision?
By far the biggest problem with this clause is condition F, which we are seeking to delete. It states,
“that any other past or continuing conduct by the person, whether or not in relation to a charity, is damaging or likely to be damaging to public trust and confidence in charities generally or in the charities or classes of charity specified or described in the order”—
in the view of the Charity Commission. That, I rather think, drives a coach and horses through all the other conditions, because if I could not debar someone under any of the other conditions I am sure that I would go to that one.
Lord Bridges of Headley
My Lords, this has been a very stimulating debate and I pay tribute to the noble Baroness, Lady Barker, for provoking it. I shall first address Amendment 5 about the proposed powers of the commission to take into consideration the conduct of a person outside a charity. I recognise that these are broad powers in that they allow the commission to take into account any outside conduct. However, these powers are necessary to enable the commission to address conduct which could seriously damage public trust and confidence in charities and need to be viewed in the context of the other criteria that apply to their use, along with the various safeguards in place.
Just as we have to place a large degree of trust in charity trustees to exercise their discretion properly in running their charities, we need to trust the Charity Commission to regulate independently and in the public interest. Of course, there is a range of safeguards, not least the independent judicial oversight provided by the Charity Tribunal, which has shown since it started work in 2008 that it is not afraid to criticise the Charity Commission in the few cases where it considers that the commission has overstepped the mark and acted disproportionately.
As I and others said on Second Reading, the Bill seeks to achieve a balance. The powers that it would confer on the Charity Commission need to be broad enough to make them useful. If they are too narrow they would be impractical and go unused—a point that my noble friend Lord Hodgson made. But charities need to know the circumstances when the powers may be used and I believe that the Bill achieves that balance.
The purpose of the noble Baroness’s first amendment would be, as we have discussed, to limit the other conduct that the Charity Commission could take into account when considering the exercise of its compliance powers. It is important that we retain this part of the clause as it prevents the undermining of public trust and confidence in charities, as all relevant—I stress “relevant”—conduct ought to be taken into consideration before the commission determines how to act accordingly. The commission could not take account of any irrelevant conduct. Indeed, I argue that the commission could be criticised for failing to act, or for taking only weak regulatory action, if it were unable to take into account relevant evidence of misconduct of an individual outside of a charity.
I shall illustrate this with an example. The Charity Commission opens an inquiry into charity A regarding concerns of financial mismanagement. It establishes misconduct and mismanagement against trustee X, an accountant, as large payments have been taken out and not accounted for. Blank cheques have also been signed by trustee X. The commission then approaches other relevant regulators which provide them with information that trustee X has had two cases of professional misconduct for accountancy irregularities in previous employment. Under Clause 3 as proposed, the commission would be able to take this other evidence into account before deciding what action it would be proportionate to take in the circumstances. If the amendment were to be accepted, the commission would be able to give no weight to this other, potentially compelling, evidence.
I emphasise that safeguards would be in place to ensure that any conduct outside of a charity would be only that which was relevant to the decision being considered by the commission. I shall illustrate those safeguards. First, there must be a statutory inquiry open and the Charity Commission must be satisfied that there is misconduct or mismanagement linked to the individual in the charity under inquiry before it can rely on any conduct from outside the charity as a makeweight in its decision-making.
Secondly, the commission, when exercising its powers, must provide a statement of reasons under Section 86 of the Charities Act 2011, which would set out the evidence it relied on in making the decision. This would include any evidence it relied on from outside the charity. No amendment to the Bill is needed to ensure that that is the case; we can amend the Explanatory Notes to make that clear.
Thirdly, as with all the Charity Commission’s compliance powers, the commission would have to be satisfied that the exercise of the power would be in line with the principles of best regulatory practice, including that it is proportionate, accountable, consistent, transparent and targeted only at cases where action is needed, as set out in Section 16 of the Charities Act 2011.
Finally, there is, of course, a right of appeal to the Charity Tribunal in relation to the exercise of the commission’s compliance and remedial powers, ensuring judicial oversight of the exercise of the relevant power.
The noble Baroness’s second amendment would remove the condition that enables the Charity Commission to consider disqualification on the basis of conduct likely to damage public trust and confidence in charities. The power to disqualify from charity trusteeship and senior management positions is indeed a significant power. As such it is important that the process is rigorous but fair, and, once again, balanced.
I shall explain what that will mean in practice. First, the individual must have met tougher new criteria to become a trustee and not be automatically disqualified in the first place. Secondly, before the commission can decide to disqualify an individual, three new conditions need to be met, as set out in the guidance issued by the Charity Commission. First, one of criteria A to F is met; secondly, the individual is considered to be unfit to be a charity trustee, defined by that guidance; and, thirdly, the commission considers it,
“desirable in the public interest in order to protect public trust and confidence”,
in charities.
The commission then has to give notice of its intention to disqualify and give a period for representations to be made before any decision is made. If a decision is made to disqualify, the disqualification could take effect only after a period of time has elapsed in which the individual can lodge an appeal with the tribunal—that is, 42 days. If the decision is appealed to the tribunal, obviously the tribunal would be able to confirm or overturn the disqualification. In making a decision, the tribunal would consider the case entirely afresh on the basis of all the evidence before it; it would not simply review the Charity Commission’s original decision. Lastly, all the commission’s actions in this process would have to abide by Section 16 of the Charities Act 2011.
As was said just a moment ago, the Joint Committee that undertook pre-legislative scrutiny agreed that there was a,
“need for a broad power to disqualify an individual in certain instances, not all of which can be specifically identified and encapsulated in legislation”.
The noble Baroness, Lady Barker, referred to one scenario and asked whether a person could be disqualified on the basis of an overseas conviction in a country where homosexuality is illegal. An overseas conviction is not enough on its own. As I have said, the commission must also be satisfied that a person is unfit to be a charity trustee and that disqualification is in the public interest to protect public trust and confidence in charity. Furthermore, the conviction must concern a charity; on its own, it would not trigger disqualification. I draw the noble Baroness’s attention to that point in the little box on page 3 of the guidance, where it talks about a,
“conviction abroad for bribery or terrorist financing in connection with a charity or similar body”,
and says that such a conviction,
“would take account of any concerns raised about any court or other legal processes, their compliance with right to a fair trial … and whether the standards of evidence and justice would not be accepted in a UK or European court”.
I think that that is all pretty relevant with regard to her scenario.
Baroness Barker
Before the Minister moves on, the point that I made about Russia is that it is entirely possible that someone could be prosecuted there under its new, draconian laws about NGOs. That is not far-fetched; it could well arise that someone comes to this country from Russia having been found guilty of an offence under those laws against a charity, and that person then wants to serve as a trustee of a British charity. Believe me, organisations such as Stonewall are regularly subject to challenge as to whether their activities comply with all sorts of things, which they do. So it is not a far-fetched scenario.
Lord Bridges of Headley
I thank the noble Baroness for that point. The power would be discretionary and on a case-by-case basis. I refer her to test 3, which says that a,
“disqualification must be desirable in the public interest in order to protect public trust and confidence”.
It goes on to say that that the,
“test will, for example, allow the commission the flexibility to take account of circumstances in which the risk of (further) damage to charity is minimal and it would not be in the public interest to act against the individual”.
I am happy to write to the noble Baroness and illustrate this issue further, as she makes a good point.
As I was saying, condition F is a comparatively broad criterion, but we consider it necessary to enable the Charity Commission to address conduct that could seriously damage public trust and confidence in charities but which would not be caught by one of the other criteria. The condition needs to be considered in context of the other limbs of the exercise of the disqualification power—those that I have just described: fitness, and that disqualification is desirable in the public interest to protect public trust and confidence in charities—and the safeguards relating to the operation of the power, including the right of appeal to the Charity Tribunal.
Baroness Barker
My Lords, I thank the Minister for his comprehensive and considered response. I say to other noble Lords that this is Committee and these were probing amendments. Although I am rather glad that we have had this discussion, I am not sure that we have satisfactorily answered the point.
I say to the Minister that I understand why lawyers, particularly charity lawyers, wish to have powers that are broad and can be used in a number of different circumstances. However, when those powers are as broad as they are in the Bill, they do not help individuals to understand their fitness to serve as a trustee. Part of the law must be about enabling those who use it to know what it means. It would have been possible, had the Government been so minded, to have addressed this problem in a different way, particularly on the matter of fitness or unfitness. They could have heeded the advice given to us by the Charity Law Association about the list of matters and criteria that could be taken into account, such as the Company Directors Disqualification Act, which has a long list of factors, which would enable somebody to know the criteria that would be used to determine whether they are fit.
On the reliance on the tribunal, in the Joint Committee debates there was a level of agreement that the tribunal works perhaps far better than anticipated by those who took part in the painful process of debating the legislation that set it up. However, I say to the Minister that, as it stands at the moment, it is only when there has been an order to disqualify and that matter has come before the tribunal that anybody will be in a position to make an independent assessment of whether the commission is acting correctly and proportionately. By that time, a person will find themselves on the end of a potential disqualification which could have a profound impact on not just their involvement as a trustee but their professional life, too.
These provisions are way too wide. They do not serve the purpose of explaining matters to people who may wish to put themselves forward as trustees but who would be so unsuitable that they would be disqualified. It does not help charities to have this lack of clarity about who they should or should not have on their trustee boards. This is a matter to which I think we may return at a later stage but for the moment I thank noble Lords for their contributions and beg leave to withdraw the amendment.
Civil Society
Baroness Barker Excerpts(8 years, 11 months ago)
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Baroness Barker (LD)
My Lords, one of the things which I do frequently in the course of my work is to talk to students, often from abroad, about the composition and work of your Lordships’ House. Every time that I do, I come to a point where I talk about the presence of the Bishops in the House. A look of puzzlement then comes across the faces of the students and, depending on where in the world they come from, there are some pretty strange and strong reactions and we have a debate about it. I always get to the point where I say, “Well, look at the United States. It was founded on the principle of the separation of church and state, but no politician would ever dare to go against the prevailing religious orthodoxy, and the consequences are that ethical matters are decided not by the body politic but in the courts”. I contrast that with our politics here, where the church plays and has played an active part in our discussions and politicians make those decisions. It is an interesting point, which we always go through, and I thank the right reverend Prelate for reminding us of the value in that and the history of how we got to that point.
The document Who Is My Neighbour? came through my letterbox when I was in the process of delivering thousands and thousands of leaflets through other people’s letterboxes. It was an uplifting document and it made me think profoundly about why I was out doing what I was doing. I note that there is a request in the report that we do not take the document as a bolstering of our own particular party point of view. However, I think that it is fair to say to the right reverend Prelate that all political parties are struggling with the fact that the drivers and determinants of economic development are becoming increasingly global, while the effects of economic change are disproportionately local. As people who operate at a national level but also as politicians within communities at a local level, the assistance of the church over the next few years in seeking to understand and mitigate the effects of that will be of immense importance. Populations and economics change but the church endures.
In many ways, the document echoes one called Call to Action for the Common Good, which was issued by the Carnegie UK Trust—a trust which is the product of Mammon at its most visceral but is working for the common good, albeit in a secular fashion. In the 2014 document, civil society leaders identified some principles which they thought should govern public policy. First, we should be investing in tomorrow. We should not be tempted to act for short-term profits but should take decisions which will reduce harm to future generations. The second principle was that everybody must do their bit: the state, business and civil society, including religious organisations, all have a responsibility to empower people to contribute by building their own solutions in their own communities. Principle number three was that we should get connected and move away from narrow functional or commercial transactions between individuals, with every person being an island, and become partners for good.
Those principles are a way of reenergising and reimagining democracy. It is what David Goodhart from Demos described as a,
“new kind of liberalism that is concerned not just with individual autonomy but also the nature of our institutions and the quality of our relationships with one another”.
I do not know whether there was any collusion between the Bishops and the leaders of civil society when they issued their documents, but I see a fair degree of common understanding. That bodes well because I joined a political party which stood at that time on a phrase which some Members will remember: community politics. Reflecting on that, I see that the great problem for us throughout was that we never had any worked-out community economics to go with the community politics. I rather think that in future those of us who stand for liberalism and wish to protect it, in particular against the narrow nationalism that some would wish to return to, will have to develop a new narrative of community politics to go with our community economics.
I will end with two points. The document was a helpful guide to those of us who are trusted not just with participating in democracy but enhancing it for future generations. It was particularly eloquent in the passages on being a society: not a society of strangers but a community of communities. But—and this is a point for the Bishops—I am your neighbour. I am also a very proud member of the lesbian, gay and transgender community and the studied omission of us from this document—I think it was a studied omission because I have listened to all the other things that the church has said—is, to some of us, regrettable. To lesbian, gay and transgender Christians, it is hurtful.
I am an optimist and I look forward to the point in the not-too-distant future when the church—not just the Church of England, but other churches—will recognise that we are your neighbours, your friends and your family, and that we have a contribution to make to the common good. I am confident that we are getting closer to a time when we will share that understanding, and I look forward to working with noble Lords, particularly the Bishops, to further that understanding.
Charities (Protection and Social Investment) Bill [HL]
Baroness Barker Excerpts(8 years, 11 months ago)
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Baroness Barker (LD)
My Lords, I declare an interest as the owner of a consultancy third-sector business. I am also an honorary officer of the All-Party Parliamentary Group on Social Enterprise.
I commend the noble Lord, Lord Bridges of Headley, on his excellent maiden speech. He introduced the Bill with great style and great knowledge. It is normal to be nervous when making one’s maiden speech but he need have no fear of being shredded today. I look forward to working with him on the Bill.
Reform of charity legislation usually happens at a pace which is somewhere between slow and glacial, so it was a great privilege to be a member of the committee that scrutinised the draft Protection of Charities Bill. The committee was chaired by the noble and learned Lord, Lord Hope of Craighead. Such was his skill, and the diligence of our advisers, that, starting in the first week of November 2014, we held 13 evidence sessions, heard from more than 35 witnesses and concluded our report by 28 February 2015. As a result, I see the noble and learned Lord as the Usain Bolt of charity legislation, and I shall continue to think of him as such in the days ahead.
The Charity Commission was established in its present form under the Charitable Trusts Act 1853, and I suspect that the first debate on the subject of its effectiveness probably took place in around 1854. Every regulator is subject from time to time to criticism from the bodies that it regulates. The CQC and the FSA have their critics, but none draws fire like the Charity Commission.
There are those who find the commission immensely helpful and who value its reports and guidance. There are also those who find the commission so defensive, distant and legalistic that dealing with it is a bit like having your family solicitors tied up in Jarndyce v Jarndyce. Then there are people like me, frequent users of the Charity Commission’s services, who are at times very much supported by what it does but at other times frustrated by its slowness to change.
The leadership of the commission changes periodically, and relationships between the commission and the sector change as a consequence. However, the underlying lack of a clear consensus about what sort of regulator the commission should be means that the relationship between the commission and the sector is never as good as it should be. There is now general agreement with the recommendation of the noble Lord, Lord Hodgson, that, if the commission had to prioritise one area of work, it should be that of its unique role as regulator. However, the commission’s reluctance to signpost charities to other sources of advice or to develop relationships with other sector bodies which could give advice that would not have the same statutory standing as its own but would help poor trustees who are seeking help to get it much more quickly, still generates great frustration. I make these remarks in order to explain why some voluntary organisations have reacted as they have to the Bill, in its present form and its draft form.
The Minister eloquently set out for us the antecedents of the Bill: the review of the 2006 Act by the noble Lord, Lord Hodgson; the National Audit Office report into the handling of the Cup Trust; and the Public Accounts Committee report on the same subject. We also know from the available data that there are approximately 350,000 charities in this country, including excepted and exempt charities, and about 800 small charitable industrial and provident societies. They have an annual income of £64 billion. Yet there is very little evidence of abuse in the charitable sector. Over the period 2007 to 2014 there were only 526 investigations into charities.
As we look at the provisions of the Bill, we have to answer two questions. First, are the provisions of the Bill necessary to retain and improve public trust and confidence in charities? Secondly, does the Bill pass what I call “the Lord Hodgson test”—because it was set out in his report—that:
“Regulation needs to be proportionate, transparent and comprehensible”?
On the whole, I think it does. A number of provisions are welcome. Giving the Charity Commission a new power to issue warnings as a lighter-touch form of regulation of charities is a good thing. Giving the commission the power to remove trustees following an inquiry and to do so within a time period that means that trustees will no longer be able to avoid being subject to the commission’s powers by resigning will strengthen trustees’ responsibilities in this regard. It is important to be able to close that loophole.
It is also important that, as in Clause 6, once the commission has opened a statutory inquiry, it should have the power to direct a charity not to take a particular course of action. It is a bit odd that it has an existing power to direct that something be done but does not have a power to direct that something not be done, when we could be talking about charitable assets.
All those powers are welcome. In particular, the power in Clause 13 to enable charities to make investments in social enterprises that are consistent with their charitable objectives is fine. Much more needs to be done in order to build the social investment market in this country. It is still extremely difficult to find venture capital, for want of a better term, for activities that have a social element as well as a profit element. But it is really important that we give charities this power to put their money where their mouth is.
However, as the noble Baroness, Lady Hayter, has already suggested, there are three key areas in which the Bill needs to be strengthened. The first is the power under Clause 3 that the commission will have to consider any other evidence of a person’s conduct—not just their conduct within a charity—when it has opened a statutory inquiry. In addition, the power is not limited in time, so it could mean that a charity trustee is hauled over the coals for something that they did when they were a very young person. That clause is drawn too widely.
I can see the sense behind the new power that the commission will have under Clause 7 to direct the winding-up of a charity. At the moment the commission cannot do that. It seems to be a sensible step but the basis on which the commission would exercise that power—the criteria it would use—should be open to considerable discussion before the power becomes finalised.
Finally, on Clause 9, “Automatic disqualification from being a trustee”, the noble Baroness, Lady Hayter, is right. It is in some ways desirable that the reasons for automatic disqualification should not be, as they largely are now, financial. It is possible that somebody could be guilty of conduct which was undesirable and harmful to a particular charity, or to charities in general, but which was not of a financial nature. However, as the power is drawn at the moment, and given the references to the counterterrorism legislation and the potential chilling effect that it may have on people who work within Islamic charities and are perfectly upright individuals, we need to exercise real caution and give that great consideration. One of the most impressive witnesses to come before the committee was Christopher Stacey, the director of Unlock, a charity that works with people who have criminal convictions. He gave compelling evidence to the committee that stopping people who have criminal convictions from having anything to do with a charity could be wholly counterproductive. We need to take great care before we make any such blanket disqualification.
On the whole, the Bill is reasonable. Given the historic and ongoing tensions in the relationship between the commission and the sector, it would be right and wise for us to have a thorough and full discussion of those three or four points which need further attention.
Voluntary and Charitable Sectors
Baroness Barker Excerpts(9 years, 10 months ago)
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Baroness Barker (LD)
My Lords, I thank my noble friend for introducing this debate and I declare an interest. I work with two consultancies which work very substantially with charities and local authorities.
The key issue facing the Government, the private sector and the voluntary sector could be summarised as the need to ensure that there is economic growth that benefits all parts of society, that we have effective public services that are responsive to people’s needs and that we have strong, united, resilient communities. That is the task for all three sectors. The measure of any organisation that is doing its job is that it knows the unique difference that it makes and that it can prove the progress it is making towards its objectives. In the context of thinking about public services, I want to focus on the specific things that Government can do to help voluntary organisations and local authorities in the tasks they have ahead of them.
The first thing the Government need to do in their programme of work is recognise that the key role that charities can provide in public services is the prevention of problems that usually, at a subsequent stage, wind up at the door of statutory services. It is incredibly difficult to prove that one has prevented something from happening. Thanks to the work of people such as Norman Lamb and Paul Burstow, we are beginning to recognise the importance of that in the NHS and social care. The challenge for this Government and other Governments is to set out their own central policies and outcome targets for government services, which include prevention outcomes that can perhaps be delivered by central government or by state organisations, but perhaps more effectively by social enterprises and charities. When he comes to sum up, I wonder whether the Minister could talk about how central government might do that.
The second thing the Government should do is to highlight the issue of commissioning and procurement. The way in which public services are procured has a profound effect on communities. In many communities it is still the case that the public authority is one of the biggest employers and determinants of growth. It is therefore of extreme importance that commissioning of services is done in a way that is beneficial to the social, economic and environmental needs of the local community. I am sure the Minister will know that EU procurement rules are being changed to enable far greater concentration to be put on the social and economic value of services. Can he say what the Government are doing to ensure that all public authorities understand that they now have this new flexibility to get greater social value in their area? Can he undertake to ensure that all public authorities realise that the Public Services (Social Value) Act came into force in 2012? It could have a profound impact as it gives local authorities leeway to ensure that price is not the sole determinant of a contract. They can take into account other factors and in certain circumstances can favour local providers, charities and social enterprises. This is a politically important development and it has so far been woefully underestimated.
The next thing the Government should do is ensure that the current high level of trust of charities that exists in the minds of the general public is maintained. The Government can do that in two ways. First, they can ensure that the Charity Commission—the regulator of the sector—continues to be an effective organisation that enjoys the trust of the sector and the public. Can the Minister update us on the programme of digitisation of the Charity Commission, which I think was announced last year? Providing relevant and up-to-date data on what charities are doing is a key and fundamental part of that trust. Can the Minister also talk about enabling the whole sector, including small charities, to become digital by default? There is complicated legislation covering how charities ought to be accountable, but the greatest thing that could be done would be to require them to set up a simple website containing their governing documents, annual report and most recent set of accounts. If that was done, we would not need an army of staff at HMRC going over these accounts as any member of the public could tell what a charity was doing and whether it was living up to its ideals.
Charities remain one of the most transformative forces in society. The key role of a charity is to transform the world around it, both its community and the public authorities. I want to talk about just one campaign being run at the moment which I think is leading the way and having a tremendous effect. The Alzheimer’s Society’s Dementia Friendly Communities programme is revolutionising the way we deal with people who have one of the most difficult conditions with which to live. I will just say this to noble Lords. In a couple of weeks’ time, I hope that they, like me, will be watching the Grand Départ 2014 of the Tour de France as it leaves Leeds. It is going to be a dementia-friendly event with lots of people with dementia who, on what I hope will be a sunny day in Yorkshire, will be remembering the happy times they had as cyclists in their youth, surrounded by those who feel confident to have them there as part of their day. That is what charities can do when they have the will.
Charity Commission
Baroness Barker Excerpts(10 years, 2 months ago)
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Baroness Barker
To ask Her Majesty’s Government what assessment they have made of the effectiveness of the Charity Commission.
Baroness Barker (LD)
My Lords, I declare a few interests. I own a business called Third Sector Business and am a consultant with B&W Consulting, both of which are small organisations that work extensively with charities.
I thank all noble Lords who will take part in the debate. The Charity Commission was founded under the Charitable Trusts Act 1853, and I suspect that the first debate on the subject of its effectiveness probably took place in 1854. It is a subject upon which many people have an opinion and few, if any, are neutral, and it is one to which Parliament returns often in the light of difficult cases. So it is today.
The commission has been heavily criticised in a series of reports over the past 12 months and at the moment appears somewhat beleaguered. The reason for holding this debate today is simple. As long as England and Wales continue to have a large and diverse charitable sector, it is in the best interests of government, charities and, above all, the public that there is an effective regulator of charities. We had the welcome news this week from the Charity Commission that the income of charities in England and Wales has risen by almost £3 billion and now surpasses £61 billion. That is a lot of public money sitting in trust, and the organisations to which it is entrusted have the right to show that they are worthy of that trust.
Today’s debate is an opportunity for Members of your Lordships’ House, with their long and distinguished experience in these matters, to think about ways in which we can rebuild confidence in the Charity Commission’s regulation of charities. It is not an opportunity for another bout of the favourite sport of bashing the commission. Noble Lords will remember that last year the commission appeared before the Public Accounts Committee, which asked the National Audit Office to review the commission’s effectiveness as a regulator and report back. The PAC produced a report written in characteristically scathing terms. It is a shame that the precision and forcefulness of its forensic examination and questioning was followed by a set of rather unclear and unhelpful suggestions for the commission. It would have been more helpful if the PAC had given a clear indication of exactly how it wished the commission to fulfil its functions in future.
The NAO report, the Regulatory Effectiveness of the Charity Commission, was published on 4 December, along with its report on the commission’s handling of the Cup Trust. Those reports do not make for easy reading but they make plain that the problems that the commission now faces are longstanding and are not the fault of the current officers of the commission, or indeed their immediate predecessors.
It is helpful to look briefly at the history of this issue to understand why some of those underlying problems have arisen. In the mid-1990s, charities grew substantially as providers of public services under contract. In 1996 the NCVO produced the Deakin report, which stated that in order to have a vibrant voluntary sector there had to be robust regulation, a clear role for the regulator and a clear legal framework within which the regulator and charities could operate with confidence. In 2001 the NCVO returned to the issue and produced a report entitled For the Public Benefit?, which, again, stated the need for a clear legal framework and, in particular, for there to be clear guidance about what is and is not a charity. That led to the 2004 Charities Bill. Many of your Lordships sat in this room throughout 2005 during the passage of that Bill and had yet more discussions on key issues such as: what is public benefit? I have to say that the decision of Parliament to leave the matter of what is public benefit to be decided by case law presents the commission with an ongoing and enduring problem in delivering its role as a regulator.
Today we are back to the position where the commission has had its budget reduced by one-third and, as ever, there are arguments about the way in which it has gone about pursuing particular cases. However, it is clear that we need to help the commission to recover ground and confidence. I work with lots of organisations, and the best of them—it does not matter which sector they are in: public, private or voluntary—do three things: they have a clear vision of what they are trying to achieve, they have the information that they need to fulfil that vision, and they have excellent relationships with other organisations. Were we to look at the commission in terms of those three issues, that might help us, the Government and the commission to see our way forward.
At heart, there remains a lack of clarity about what the commission’s job is. Following the strategic review of the commission a couple of years ago, everyone has now agreed that its principal role is to be a regulator; that is the unique role that it can fulfil. However, what do we want it to regulate—simply charity law, compliance with charity law, or the increasingly individual charities? In certain parts of government, I think that there is a view that we should have a de minimis regulator along the lines of the FCA, which simply regulates compliance. I do not think that is right. We have the most advanced, complex and vibrant voluntary sector in the world, and we need a regulator that is much more proactive about setting standards of good governance and trust. We need the Charity Commission to regulate within that framework.
On the matter of relationships with other organisations, I have always had a feeling that the commission is a somewhat distant and aloof organisation. In these times of straitened economics, the commission needs to be far more adept at developing good strategic relationships with other organisations. It ought to proactively signpost charities and the million trustees who use its services to go to other organisations for top-quality information and advice. It has always been reticent about doing that in the past.
The principal issue on which there could be a steer from government is the relationship between the commission and other regulators. The report into the Cup Trust has shown clearly that HMRC was at fault. From the beginning, it was clearly an issue of tax evasion and should have been dealt with primarily by HMRC, with some assistance from the Charity Commission on its areas of specialism. In future, that is what the commission should do with all regulators. The onus should be on other regulators, and the Charity Commission should be a specialist back-up point.
In the very little time remaining, I want to say one thing. The budget of the commission has been cut; we all hear about that endlessly. The Government should make one piece of investment: in the commission’s digital strategy. I am sad enough that I use the Charity Commission’s register all the time. It is incredibly clunky; you have to really know what you are looking for. In this day and age, it does not answer the strategic needs of anyone—of government or of the sector. The single most important thing that could be done to encourage public trust in charities—that is what this has all really got to be about—is to require any organisation that calls itself a charity to have the most simple of websites, on which it must have its annual report, its governing document, its latest accounts and its statement of activities. If the Charity Commission were in a position to actively promote digital transparency throughout the sector, far fewer problems would end up at its door. The noble Lord, Lord Hodgson of Astley Abbotts, was absolutely right. There are 175,000 registered charities, and a greater number of very small organisations that call themselves charities but are not registered. The commission alone cannot police every one of them but, with the help of the Government, who are currently pursuing their own digital strategy, it can drive up standards of transparency and accountability. I hope that we will focus on that today.
Civil Society
Baroness Barker Excerpts(10 years, 9 months ago)
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Baroness Barker
I thank the noble Baroness, Lady Prosser, for introducing this debate and I declare an interest. I have a small consultancy that works with charities.
I am not a big fan of the phrase “civil society”. Every time that I come across it, I think that it does a disservice to what it is trying to describe, but I cannot think of anything better. I am not always entirely sure what it is. I listened to the noble Baroness, Lady Prosser, giving her explanation at the beginning. For me, civil society means the point at which the statutory, voluntary and private sectors come together to make a difference to the common good and the lives of citizens.
If we had had this debate about 10 or 15 years ago, I do not think that we would have talked very much, if at all, about the role of the private sector in all of this, but we do now. It is the part of civil society about which we know least. There is a new report by Dr Catherine Walker, published by Directory of Social Change, which looks at corporate giving. There is some very interesting information in it that noble Lords will probably not have heard before.
The report is an analysis of the giving of the top 550 corporate givers. It uncovers that companies play an important part in political and social development, but there is little evidence about what they do. They give approximately £700 million to £800 million, though it is a bit difficult to tell, because some multinational companies do not declare. That represents 2% of all charitable income, and 20% of companies give 90% of the cash that is given to charities. Cash donations to charities make up about 77% of the donations and the balance is gifts in kind. The average donation by a company is about £1.1 million. There are 73 companies that give more than £1 million. As far as we can work out, the total contribution as a proportion of pre-tax profits is 0.3%. Does that not say something?
In England, the biggest beneficiaries of charitable corporate donations are in Greater London, which gets about 33%. The West Midlands gets 1%. As far as we can tell—where it is possible to tell—the giving is totally unrelated to need. Corporations give where their offices are. They give primarily to community and social welfare charities, to education and to children’s charities; more than 50% of all giving goes to them. Causes such as human rights and women’s issues are far less popular. They get less than 10%. Arts and culture are traditionally seen as the domain of corporate givers rather than of individuals.
Despite everything that has happened since 2008, the financial sector is still the top sector for charitable giving. It gives about £245 million in cash. The least charitable sector, with an average spend of just about £300,000, is technology. I am glad that the noble Baroness, Lady Lane-Fox, is now in her place. There are also corporate trusts, and they provide about half a billion pounds in grants, 50% of which goes to three causes: education, community and social welfare, and children. This is the first report of its kind and it has set a benchmark in reporting. I hope that it will be possible to repeat the exercise and grow the statistical basis. We know that we need more transparency in reporting. There are also some limitations. We know practically nothing about the corporate giving of small and medium-sized enterprises.
The report is an important piece of work. Why is it important? It shows that giving varies dramatically across the country and that there is a key role for government in making up the deficits geographically and in terms of sectors, because of the disproportionate benefit to different localities.
I hope the Minister saw the Institute for Government’s report Making Public Service Markets Work because the private sector increasingly plays a huge role in and benefits enormously from the delivery of public services. We know that the big four—G4S, Capita, Serco and Laing—get by far the majority of the billions of pounds of public service expenditure. We also know from last year’s NCVO and CAF survey that local charities are beginning to lose out because of the way in which commissioning and, in particular, procurement is being done. The noble Lord, Lord Hodgson of Astley Abbotts, was absolutely right.
In its submissions to government on government procurement, NCVO said that social value ought to be both the strategy objective and at the forefront of the Government’s policies on procurement and commissioning. The Social Value Act is incredibly important as public services will remain large and significant employers in different localities, particularly in hard-hit areas outside London. It is therefore important that we take all this information into account and that the Government rethink the part they have to play in relation to the private sector’s role in civil society and in enabling all citizens in all parts of the country to get the best from it.
Mental Health (Discrimination) (No. 2) Bill
Baroness Barker Excerpts(11 years, 3 months ago)
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Baroness Barker
My Lords, I forgot to put my name on the list, but I hope that noble Lords will permit me a couple of minutes to make two points that have not been made so far in this debate. I, too, thank the noble Lord, Lord Stevenson, for his work in bringing this issue back to the House.
The legislation that the Bill seeks to repeal was passed because, at the time, Members of Parliament thought that they were protecting people vulnerable because of mental illness and the organisations named in the Bill. Since then, there have been two significant developments that make this Bill appropriate. The first is that the Mental Health Act 2007 states that mental disorder,
“means any disorder or disability of the mind”.
The effect of that, which was intended by the then Labour Government, means that today mental health legislation extends to a very wide range of people, including those who have mild depression. People who would never believe it until it happens to them can find themselves subject to mental health legislation and being excluded from the duties set out in the Bill. That should not be the case.
Secondly, the Mental Capacity Act 2005—a piece of legislation of which the last Labour Government should be rightly proud—enshrines in law the common understanding that we all have, that people with mental health problems or learning disabilities can vary day to day. Their condition can vary; it can sometimes be good and sometimes be bad. Since the legislation was passed, it has become much more common for people with mental health problems, such as those who are bipolar, to state at a point when they are well that they know from past experience that they may during a period of illness make unwise decisions. They can make an advance statement that says, “Now that I am well, I wish to say that if during my illness I make unwise decisions, I wish those decisions to be ignored”. That makes episodes of mental distress much more manageable than they ever were in the past. For those two reasons, it is very important that we pass the Bill. For example, with juries, there is no reason why a major trial should be jeopardised, because people can recuse themselves; they can go to see the judge and make sure that they are not holding things up.
There is one other reason why this provision is important, and I refer back to the new organisation of the noble Lord, Lord Stevenson, Insight: Research for Mental Health. It is the objective of everyone who works in mental health services to fund research that will one day find the cause of mental distress, new treatments and ultimately, one day, a cure. If we continue to debar people from aspects of public and economic life, in particular from roles that give them meaning, we delay the point at which we will be able to find those treatments and cures that will enable people with mental health problems to do as they do in many cases now—to continue to function day by day as valued and valuable economic and social contributors to our society.
For all those reasons, this is not just a Bill that we should commend. It is one that we should ask the Government not only to pass but to help to be implemented as quickly as possible.
Public Services
Baroness Barker Excerpts(11 years, 4 months ago)
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Baroness Barker
My Lords, I, too, thank the noble Lord, Lord Boateng, for introducing this debate. I declare an interest; I have a consultancy called Third Sector Business.
Three years after the financial crisis in the City, the shock waves are making their way out to local government and to charities. The noble Lord mentioned the survey results that came out this week from the Charities Aid Foundation. They should have come as no surprise. The survey showed that there are approximately 10,000 charities that are very vulnerable because they derive a large percentage of their income from delivering services through contracts with local authorities. Probably some of the charities have lost sight of the purpose for which they were set up. Some of them may deserve to move over and make way for more innovative and interesting social enterprises that are very tech-savvy and cost-effective; but some of them for years have been subsidising local authority service provision, and some of them are very important to the communities that they serve and to which they bring additional benefits. Therefore, some of the organisations deserve help to survive.
The Government recognised that in April this year when the Cabinet Office launched the £10 million Investment and Contract Readiness Fund, run by Social Investment Business. That is a three-year programme, but it is urgent that learning from the programme should be got out quickly to charities that clearly need to develop new business models and the sort of skills that the noble Baroness, Lady Stedman-Scott, talked about, such as measuring their impact, knowing their cost base and, above all, being able to demonstrate that they are the best organisations to serve the people who need public services.
In 2007-08, the Public Administration Committee published Public Services and the Third Sector: Rhetoric to Reality, in which it asked: “Does size matter?”. It is a hugely important question. In future, public services that will be delivered by the third sector will primarily be those where it can be demonstrated that money is being saved elsewhere in the public expenditure budget. The problem with that is that often the people who deliver the services have real difficulty demonstrating the savings and the value to other parts of the public service system. Under the previous Government, Total Place budgeting began to address that issue. Under this Government, community budgeting is going to continue—but it has a long way to go before it will be possible for one public service commissioner to say, hand on heart, that giving money to a particular voluntary organisation has definitely saved money.
It is particularly important for models of preventive services—in other words, services that apply across whole communities that are at risk rather than to individuals. Will the Government put greater effort into developing the community budgeting skills of local authorities and of the voluntary sector? Community budgeting will only work, as the noble Baroness, Lady Stedman-Scott, said, if we have a commissioning process which is sufficiently flexible to deal with the major problems which we have. There is a question about how we configure large and small voluntary organisations in future to deliver public services on the scale which we know is going to be necessary. We know that in social care, in order to relieve the pressure on NHS budgets, the voluntary sector is going to have to deliver a lot of high-quality services. In conclusion, this is going to be a very turbulent but quite exciting time if the Government can assist the voluntary sector with two or three specific targeted things which I have mentioned. I hope the Minister will say that they can.