Charities (Protection and Social Investment) Bill [HL]

Baroness Hayter of Kentish Town Excerpts

Monday 14th September 2015 Lords Chamber

Moved by

[Baroness Hayter of Kentish Town]

1: After Clause 14, insert the following new Clause—
“Conduct of charities: regulation of fundraising
(1) All charities raising funds of over £1 million per year must be members of the Fundraising Standards Board and abide by the Code of Fundraising Practice.
(2) In section 64A of the Charities Act 1992, as inserted by section 69 of the Charities Act 2006 (reserve power to control fund-raising by charitable institutions)—
(a) in the title omit “Reserve”;(b) in subsection (1) for “may” substitute “must”.”

[Baroness Hayter of Kentish Town (Lab)]

My Lords, we come to the Third Reading of the charities Bill. I will also speak effectively to Amendment 2, which is clearly related to Amendment 1. Amendment 1 stands in my name and that of my noble friend Lord Watson, and it deals with an issue which is as yet unresolved—namely, the appropriate way of regulating fundraising by charities from individual donors.

By way of background, although chugging and cold calling have long been issues of frequent complaint, it was the very sad case of the death of Olive Cooke, herself a lifelong donor and a volunteer poppy seller, which brought to light the unacceptable behaviour of a number of the big fundraising charities and the inadequacy of the current scheme of self-regulation. Although it was we who first raised the issue here, since then there has been widespread acceptance by the Government, the charities and even the so-called regulatory bodies—the code-setting institute and the Fundraising Standards Board—as well as by the Commons Public Administration and Constitutional Affairs Committee, which is carrying out its own inquiry, that the self-regulatory system failed. It failed to maintain appropriate standards, it let down donors and let down the wider public—which brings us to today.

When similar, indeed identical, amendments were tabled on Report, following discussion in Committee, the Government accepted the need for change and tabled amendments of their own. However, at that time, they were not fully convinced of our two proposals—first, that membership of the current voluntary membership body, the FRSB, and adherence to the appropriate code should be mandatory; and, secondly, that the Charity Commission’s reserve powers on fundraising should be activated.

However, given that the Government accepted that we had not reached a final position on this and that further amendments might be required, the Government asked Sir Stuart Etherington, chief executive of the NCVO, to chair a group, which includes the noble Lord, Lord Wallace of Saltaire. I believe that Salts Mills in Saltaire was the venue for some of the wonderful photography in the BBC’s “An Inspector Calls”, broadcast last night. The committee also comprises the noble Lord, Lord Leigh of Hurley, and my noble friend Lady Pitkeathley, and was set up to consider whether further change might be needed and to report back to the Government. Regrettably, we find ourselves in the slightly odd position of having Third Reading this afternoon, just days before that committee is to report. This is, therefore, very much work in progress, and we will be sending the Bill to the other place a bit unfinished.

I know that the Minister is not behind this timetabling. I think, like me, that he would like to have this issue properly debated and decided upon here, because I know that he is genuine in wanting a robust system in place. If I was suspicious—and I never am—I would think that the Government were wanting to seize the initiative themselves, make a good announcement from the platform at the Tory party conference and take the credit. If so, I will cheer them on, given that we are not seeking change in order to get the credit but to make sure that we have the right solution.

However, it is clear that we do not yet know the best way forward, although I think that everyone accepts, including the big charities and the new chair of the Fundraising Standards Board, who appeared before Bernard Jenkin’s committee, that membership of the board must become compulsory and that the board, which should be independent of the charities it regulates, must in some way have more power than naming and shaming, which is open to it now. There is also general agreement that the weak and unsatisfactory fundraisers’ code must be beefed up. Furthermore, it seems obvious that such powers are bound to entail some role for the Charity Commission, either via a portal, whereby the standards board can report misbehaviour to the commission for subsequent investigation and statutory action, or via such a board being commissioned, licensed or authorised by the Charity Commission, such that there is a degree of statutory oversight to ensure independence and the board would have to satisfy the commission that the code and its procedures were robust and fit for purpose, and will work independently of its regulated community.

There is no doubt that the key players accept the thrust of this, although we regret that some of the charities and perhaps the Institute of Fundraising itself have not quite accepted the independence that a new system requires. Their letter to the Sunday Times was outwith any discussion with the Charity Commission or ourselves, which suggests that they want to hold on to a self-regulatory model, which has failed the public.

We are not wedded to any particular model, provided that it is independent and effective in order to enable complaints to be heard, and drives up standards. We are clear that such changes need to happen. We are happy to await the recommendation of the Etherington committee, albeit we wish that the timetable was different. The amendment therefore is to make it clear that the Bill as its stands, and as it will go to the Commons, is not yet adequate. The amendment is to allow the House also to hear from the Government how far their thinking has progressed over the summer. I beg to move.

[Lord Wallace of Saltaire (LD)]

My Lords, I should admit that I spent the weekend in Yorkshire, where, to my surprise, my neighbours do not hate people outside Yorkshire and nor do they in fact hate each other. We had a very pleasant weekend. I should also admit that, some months ago, I enjoyed watching the filming of that part of “An Inspector Calls” in our very beautiful village.

We are concerned here with the future of charities. I have found it very constructive to be involved in the thorough Committee and Report stages that we have had on this important Bill. I think we all recognise that as government spending shrinks in the next three or four years, charities will have to play a more important part in looking after a range of good causes and disadvantaged people across our country. That means that the importance we attach to the regulation of charities—the subject of this amendment—is something that requires continuing attention. It also requires active support for philanthropy, and I trust that the Government will pay active attention to encouraging visible philanthropy. I was glad to see the Financial Times highlighting this last week.

Having been involved in the committee to which the noble Baroness referred, which will present its report to the Government shortly, I am slightly more sceptical about standards across the whole universe of charities than I was before. Clearly, there is need for tighter and more visible regulation. A number of charitable trustees have not understood how active and responsible their role should be, and these matters need to be addressed.

There is a continuing role for this House in providing oversight to the charitable sector. Perhaps we should consider, in future years, whether a sessional committee of this House might look at some aspects of the charitable sector. As we saw in Committee and on Report, there is some very valuable expertise in this House.

I think that all of us here accept that charities are not comparable to commercial enterprises, as I and others have heard it suggested on one or two occasions. Charities have a privileged status both in legal and taxation terms. The standards of behaviour that we rightly expect of them reflect that privileged status. These high standards should apply to the whole diverse field of charities: to the development charities, as well as to private schools; to libertarian think tanks, as well as to medical charities. We are entitled to expect that their trustees enforce that.

As a backstop, we need to consider what level of regulation is enforced and implemented and how that regulation is organised. We will indeed be reporting on that. I have some sympathy with the noble Baroness when she says that the role of the Charity Commission also needs to be re-examined as a backstop to whatever formal regulation the sector itself provides.

Having said that, I trust that when our report is presented there will be an opportunity to debate it, and certainly, when the Bill comes back from the Commons, there will be another opportunity to make sure that we have moved matters forward. I merely emphasise again that the charity sector is extremely important to our society and to aspects of our economy. It deserves, therefore, to be fully regulated and as transparent as possible.

--- Later in debate ---

I can tell the House that next month the Charity Commission will publish revised guidance which sets out illustrative examples of the ways in which an independent charitable school can carry out its purposes for the public benefit and a revised sample trustees’ annual report for a fee-charging charitable independent school. The Independent Schools Council has committed to raising awareness among its members of this new guidance and examples. I repeat that I hope that noble Lords with an interest will continue to engage with the Charity Commission and the ISC as they continue this work over the coming months and years, especially on the other two items that we also agreed on Report, which I know are proceeding to be dealt with.

[Baroness Hayter of Kentish Town]

My Lords, that turned out to be a more educative and perhaps more interesting debate than I had hoped. I join the Minister in thanking everyone who has contributed. I apologise to the House that I forgot at the beginning to declare that I, too, am a trustee of a couple of charitable trusts.

I start with the same emphasis made by the noble Lord, Lord Low, my noble friend Lady Young and others on not tarring all charities with the same brush, and on the incredible importance of charitable work. I think that I have spent more of my professional life running charities than anything else, so I am absolutely aware of that. I will make a couple of comments because the follow-on is that, when I was able to raise funds, it was very much because of the public’s good will and trust, in the words of the noble Lord, Lord Leigh of Hurley. They trusted not only that we would use their money effectively but that we had the expertise and specialism to look after the sort of clients that we had. We, as the charitable sector, must never lose that.

My noble friend Lady Pitkeathley said that she thought that charities’ thinking had changed over the summer, and if ever your Lordships’ House helped in that, it should take some credit for it. I am perhaps not thinking that they have all got there completely. The noble Baroness, Lady Barker, said that she wanted the Etherington report to be hard-hitting. I do not really know the noble Lord, Lord Leigh, so well but I know the other two Peers and I certainly know Sir Stuart, and I think that I could trust those four not to pull their punches.

I hope that what the Government said is not pre-empting that by appearing to rule out any statutory response. The noble Lord, Lord Wallace of Saltaire, used the word “backstop”, which is close to what I was suggesting. My judgment is that a pure self-regulating system will no longer be acceptable. I absolutely concur with my noble friend Lady Young that the letters FRSB should not be used: it will not be a fundraising standards board, whatever it is. I also doubt whether it will continue as voluntary. When he gave evidence in front of Bernard Jenkin, its new chair, Andrew Hind, seemed to rule out the possibility of it remaining completely voluntary. If we can find something that is a backstop rather than a red-tape regulation, that may be the right way forward. As I said in introducing the amendment, it was to give us the opportunity for this debate; we have an open mind on what is the correct way forward.

I make only one other point, which the noble Lord, Lord Wallace of Saltaire, mentioned, which concerns the role of trustees. The Independent Schools Council seems to have grasped it. I hope that the trustees—if they are called that—of the various schools take that message on board as well and look proactively at what might be done with the state system. When I met the Charity Commission recently, it said that in its research it was going to ask to what extent fee-paying schools ask the local community, “What would be best for you?”, so that it is not just paternalistic giving but real response to needs.

Having said that, before I beg leave to withdraw the amendment and we send this slightly unfinished Bill down the corridor, I take this opportunity to thank the noble Lord, Lord Bridges, who as everyone said, has really played a blinder over all this. It has been a real pleasure to work with him on the Bill. We must also thank the Minister at the other end, who has also met us and been very responsive. I also thank the Bill team, who, as ever, we have worked rather hard, and my noble friend Lord Watson, who joined me on the Front Bench for the first time, I think, and has done an awful lot of the heavy lifting on the Bill. With those thanks, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.