Income Equality and Sustainability

Baroness Pitkeathley Excerpts

Wednesday 6th May 2020 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I join with others in thanking the most reverend Primate for his service to the House and to the country. His excellent speech caps a career spent campaigning for greater equality in income, notably the living wage. His time has surely come. I declare an interest as a former chair of StepChange, a debt charity, and I would like to make two points.

First, we are seeing a welcome attempt by the Government to mitigate the supply shock being caused by Covid-19. Keeping sufficient liquidity in the economy to ensure that companies can survive and hold jobs open is crucial. But as the IPPR reported today, once the immediate crisis is over, the economy will be scarred and we will need a broad-based stimulus to drive up demand, reduce risk and support the creation of high quality jobs—particularly, as other noble Lords have said, for young people about to enter the job market. Can the Minister confirm that plans for this are under way?

Secondly, the figures show that the Government need most urgently to support the debt charities that are working with those who are suffering because of unmanageable debt. ONS figures show that 8.6 million people have experienced reduced income as a result of the coronavirus crisis, while Citizens Advice has reported that over 13 million people have already been unable to pay or expect to miss at least one bill, and there has been an 81% increase in the use of food banks.

The Government should lead by example by taking measures to reduce the impact on households which are falling behind on bills. These could include bringing forward the statutory breathing space, temporarily suspending the rule that people become liable for their full council tax bill if they miss one payment, temporarily halting all bailiff activity and agreeing with the proposal from Citizens Advice for better protection for renters.

[The Deputy Speaker (Baroness Pitkeathley) (Lab)]

With apologies for the difficulty in hearing the noble Lord, Lord Stevenson, I now call the noble Baroness, Lady Janke.

[Baroness Janke (LD)]

My Lords, I thank the most reverend Primate for securing this important debate today which provides an opportunity to highlight the growing inequality of income and subsequent disadvantage to many people, as he has done for so long throughout his career. It is shocking for British people to learn that in the 21st century, 14 million people are living in poverty and 4 million of them are children. I also pay tribute to the right reverend Prelate the Bishop of Derby for her eloquent speech and the points she made from her experience of working with and protecting children.

It is well documented that policies over the recent years have not furthered the cause of equality—rather, they have widened the gap between the rich and the poor, as the most reverend Primate said in his speech. For most disadvantaged people, there has been a systematic reduction in, and removal of, vital services and rights, as so many noble Lords have said. With the massive and unprecedented cuts to local authorities, vital services have virtually disappeared, services on which the poor depend. Changes to benefits have removed any effective safety net for those who experience catastrophic events. The UK has the fifth largest economy in the world and is a leading centre of global finance, yet one-fifth of the population—14 million people—are living in poverty, with 4 million of them below the poverty line. The current pandemic emergency has laid bare the shocking shortfalls in our woefully inadequate social safety net.

We have heard from noble Lords today about the importance of tackling these issues, and the post-Covid recovery is going to be of crucial importance to the least well off in this country. We have heard about the importance of social insurance based on progressive taxation, a point made by the noble Baroness, Lady Neville-Rolfe. This would give rise to a new society that would spring up, as the most reverend Primate has said. The noble Baroness, Lady Meacher, highlighted the potential for massive unemployment and the need for a form of job guarantee scheme, while my noble friends Lady Kramer and Lord Bruce talked about the minimum basic income policy. My noble friend Lady Randerson highlighted the importance of investment in education and infrastructure, as well as the importance of supporting charities on which so many depend, a key point made by the most reverend Primate, the Archbishop of Canterbury.

We have also heard about the need to learn from the emergency, particularly from the care and kindness shown by people in our own communities and from the values of empathy and service that have been shown. The noble Lord, Lord Moynihan, and the noble and right reverend Lord, Lord Harries, highlighted this. The most reverend Primate the Archbishop of Canterbury spoke of the importance of affirming the dignity and worth of all. The noble Baroness, Lady Healy, highlighted the fact that key workers, often in low-paid and insecure jobs, are of vital importance, and spoke of the need for an income floor.

I also want to highlight the issue of health and the impact of poverty on health. The Marmot report produced in February this year—

[The Deputy Speaker]

My Lords, we seem to be having connection problems with the noble Baroness, Lady Janke. I call the noble Lord, Lord Tunnicliffe.

Health and Social Care

Baroness Pitkeathley Excerpts

Thursday 15th December 2016 Lords Chamber

[Baroness Pitkeathley (Lab)]

My Lords, there are very few people who know as much about patient participation as my noble friend Lord Harris, so it is entirely fitting that he should lead this debate. I join others in sending condolences to the noble Lord, Lord Prior, and regret that he is not here—by which I mean no disrespect to the noble Baroness, Lady Chisholm, who I know will have more than an adequate response for this debate.

I have never heard anyone say that patient participation should not be encouraged or that it is in any way undesirable. On the contrary, I have heard the praises of patient participation sung over 40 years or so. Sadly though, its history is not marvellous and we have not made as much progress towards the reality of “nothing about me without me” as the rhetoric might suggest. But being critical of the progress of patient participation as a policy does not mean being critical of individual transactions and relationships between NHS staff and patients. On the contrary, I should point out that my own experience as a patient has always been good. Although I was, at one point in my life, in hospital for six months, I have no complaint to make on that score. In the whole of that time nothing was ever done to me—no procedure was started or undertaken with my consent—without asking my opinion and acting on my opinion when I gave it. Your Lordships might point out that there are not perhaps many Baronesses with an interest in healthcare on NHS public wards, but I always perceived the same care and respect being given to my fellow patients, however frail they were and however poor their English was.

But putting patients first in policy terms is easy to say and hard to do, as the various attempts over the last 20 years have shown. As the King’s Fund has observed, despite pockets of good practice, there has been a lack of systematic progress, and it suggests three reasons for this. The first is a lack of clarity about what involving patients and people in healthcare actually means, so people and staff are confused about what is expected. The second is the power issue. The involvement of patients challenges orthodoxies, vested interests and established ways of doing things. If you share power with patients, which everyone says they want to do, it means that someone—the doctor, the nurse, the administrator—has to give up a bit of their power, and that is hard for them to do. The third reason the King’s Fund opposes this is that it may have been a goal but was never a priority across the healthcare system.

It is important to recognise that patient and public viewpoints and opinions can make a genuine contribution to debate in shaping national policy and enhancing accountability. It can also help you to manage resources better, as what patients actually want may be less than what professionals imagine they want. The previous attempts to set up effective means of harnessing patient and public views have been set out by my noble friend. We all remember CHCs. I do not think PALS has been mentioned thus far. LINks, forums and the Commission for Patient and Public Involvement in Health have all bitten the dust amid a storm of criticism that they were not representative, too bureaucratic, not good value for money and so on. Many would argue that they were never given either adequate time or resources to prove themselves.

I am on record as saying I was not a fan of the Health and Social Care Act 2012, which in my view has had a deleterious effect on health and social care because it put in place a disastrous and unnecessary reorganisation even though a pledge had been given when the Government came to office that no such reorganisation would take place, and which distracted the hardworking staff of the NHS at a critical time. However, in spite of the late changes to the Bill that my noble friend pointed out, the setting up of Healthwatch seemed like a ray of hope, a concerted attempt to bring the voice of the patient and consumer into planning and a means of feeding back the actual patient experience.

The vision for Healthwatch is inspirational. It seeks a society in which people’s health and social care needs are heard, understood and met so that people can shape their own care, influence its delivery and hold services to account. I commend the work of its first chair and CEO, together with its board, in setting up the organisation and beginning to establish public trust. The combination of local organisations, fully linked into local concerns, with a national body to influence public policy could provide the best chance that we have yet seen to establish effective service-user representation. The current state of health and social care can leave no one in your Lordships’ House in any doubt of how much that is needed.

As we have heard, though, there are two big issues facing Healthwatch. First, it is only as strong as the performance of its local organisations. Funding at local and national level is being squeezed, with about half of local bodies reporting reductions, and in the current year the funding is one-third less than the £44 million originally allocated to local Healthwatch organisations for them to carry out their statutory duties. We should remember that their complaints work is just that—a statutory duty. Many local Healthwatch organisations are already reporting that the situation next year will be even more difficult.

It is now widely accepted that a major problem facing health and social care is the need for service redesign—the integration of budgets across health and social care, for example, and more rationalisation of hospital services. Unless we involve patients and families in this debate, we will waste time and money on dealing with the resistances that such changes inevitabily bring about, so it would be a wise investment to support local Healthwatch. That is clearly not happening, as my noble friend has reminded us.

The second major issue facing Healthwatch, as we have heard, is about independence. Healthwatch was conceived as independent at both local and national level. The trust of the public depends on that independence. The closeness to the CQC—its subordination, some would call it—has compromised this, but there is some feeling too that the Government are too sensitive to criticism, and the decision not to renew the contract of the outspoken first chair is perhaps evidence of that. We have heard that this defensiveness is widespread at local level too.

This has been an all-too-frequent result of previous attempts to set up effective patient representation, from CHCs through to the Commission for Patient and Public Involvement in Health and the other organisations we have heard about. What happens is that Governments commit to effective patient representation with a big fanfare. Then, the body starts to act effectively, asking for change and giving patient feedback. Then the Government of the day say, “Hang on a minute, we did not want that kind of feedback”.

If they are really committed to patient and public involvement, governments at local and national level must stop being defensive, be confident about the positive role that the voice of patients can play and use the feedback received to improve services, which is surely the aim not only of patient representatives but of the Government themselves. I hope that the Minister will assure the House that that is indeed the aim of this Government and that they remain committed to a strong, vibrant Healthwatch at both local and national level.

I could not be more delighted by the appointment of Imelda Redmond as the new CEO of Healthwatch nationally, and wish her well. Let us please learn from the history of patient and public involvement, and not make the same mistakes again.

Civil Society and Lobbying

Baroness Pitkeathley Excerpts

Thursday 8th September 2016 Lords Chamber

[Baroness Pitkeathley (Lab)]

My Lords, like other noble Lords, I thank my noble friend for bringing forward this debate today and declare my interests as set out in the register. I am speaking today in my capacity as chair of the recently established Select Committee on Charities. I also thank my noble friend Lord Foulkes for his kind remarks—I will pay him later. The committee was established in June of this year to,

“consider issues related to sustaining the charity sector, and the challenges of charity governance”.

This is a broad remit, but one we will endeavour to tackle.

The charitable sector in this country has a long and proud history, as your Lordships know only too well. However, it is clear to me and my committee—and, indeed, I think to your Lordships’ House as a whole—that the sector is under pressure. In fact, in 40-plus years of working in and with the sector, I have never known it under such pressure. I know that none of this will be news to any of your Lordships, but it is worth reflecting on those pressures.

The scandals of recent years mean that the sector is under intense scrutiny. The impact of that scrutiny has been for the general public to start thinking more carefully about where its money is going. There is no doubt that there has been a decline in levels of trust in the sector, and though recent research suggests that trust is on the rise again, the sector can never be complacent. We know that the worst stories do not represent the best of the sector, but, equally, we know there is work to be done about regulation.

Of course, anyone who has anything to do with the charitable sector cannot fail to be aware of the huge financial pressures it faces. We are a very long way from the heady days of the early 2000s, when we all felt flush, when government money was being dished out to all sorts of strategic partners, to many different initiatives, and when local authorities were keen to go into partnership to deliver innovative schemes for tackling deprivation. We even had an advisory body in what was then called the Office of the Third Sector, now called the OCS, which I had the honour to chair. What is more familiar now is the winding up of charities, their disappearance rather than their expansion and innovation. At the same time, the demand for charitable services has increased with rising levels of poverty and deprivation and the results of austerity, as noble Lords have said.

To add to these pressures, there is the current political and economic uncertainty in light of Brexit. Your guess is as good as mine on what will happen next, but even the risk of instability is a challenge for the sector. We know that, as the country adapts to a post-Brexit landscape, the charity sector will be expected to adapt and evolve. I have every confidence that it will do so because the sector’s record of adaptation and initiative is well documented, but the road ahead may be hard.

We also have the new Act. I hope that the Charity Commission powers will be used cautiously and proportionately. The powers to make social investments are also an important step forward for charities, and I hope they will prove to be of benefit—I should declare my interest as chair of the Big Society Trust, which is set up to keep the Big Society Capital true to its mission of supporting the social sector. We should not, however, be deluded into thinking that social investment is a panacea for the money problems of the charitable sector. It is an important element but an element only.

Noble Lords know that the sector has had its share of both positive and negative parliamentary attention in recent years, but there was an appetite to look more widely at the challenges faced by the sector and how it can be most effectively supported in its important work. I acknowledge the hard work of the noble Lord, Lord Shinkwin, in bringing this to the attention of the Liaison Committee and for its decision to set up the ad hoc committee. The committee wants to help and support the sector and for this to be a positive engagement exercise which truly reflects the problems for everyone working with charities.

I have described the pressures, but part of what the committee wants to understand is the opportunities, as the noble Lord, Lord Foulkes, has said, that exist for charities to thrive. We are clear as a committee that what must not be allowed to happen is that the excellent and essential work of so many charities should be blemished by the actions of a small minority. If we encounter complacency and poor practice, we will of course challenge them, but we are seeking to celebrate success and innovation more than anything else.

I am delighted to say that we have received more than 150 submissions to our call for evidence, the deadline for which was last Monday—but of course we are being flexible about that. Of those submissions, 112 were from charities themselves, and, of those, 28% were from charities with a turnover of less than £1 million. I think it is particularly important for the members of my committee to hear the voices of small and medium-sized charities. My committee and I have a busy few months ahead and some big questions to consider. We are up to the challenge and committed to making sure that the right policies and support systems are in place for the sector to continue to be such a valuable part of our society.

I turn now to the issue of lobbying. It is inevitable, when we think about charities, that we tend to focus on the services they provide, because that is what we are most familiar with. I am delighted that the title of our debate today includes the issue of lobbying activity because, to my mind, this lobbying, this voice, this representative function is one of the most important functions which charities perform.

I was proud to be, for more than 10 years, the CEO of Carers UK, whose sole function was to advocate on behalf of carers and to bring to the attention of government, the media and the general public the contributions made by carers and to ensure that they receive support in the important but stressful role they play. When I first worked in this area, the very word “carer” was unknown—indeed, it was nearly always misspelled as “career”. Now carers are out of the closet, and that is almost entirely down to the work of carers’ organisations enabling carers to make their case and gain support. There is still not enough support, of course, so the work must go on. Therefore, anything which in any way restricts the ability of vulnerable groups to lobby or put their case must be resisted at all costs.

I have spoken on this issue all over the world. Our tradition of charities being funded by government to lobby government is the envy of the world. It is the envy of many countries which are not so fortunate as the United Kingdom is to have that philosophy. I know many noble Lords feel as passionate about this as I do, and I hope the Minister will assure us that she does, too.

Charities (Protection and Social Investment) Bill [HL]

Baroness Pitkeathley Excerpts

Monday 14th September 2015 Lords Chamber

It is most appropriate that the Bill talks a lot about the roles and obligations of trustees, but that is not the subject of this amendment, which focuses on the fundraising review and regulations, so I shall restrict my remarks to that. Before I sit down, I congratulate the noble Lord, Lord Bridges of Headley, on taking through his first Bill. His maiden speech was at Second Reading and we are grateful to him for seeing this Bill through.

[Baroness Pitkeathley (Lab)]

My Lords, mindful of the rules at Third Reading, I will say that I have great sympathy with my noble friend’s amendment but share her concern about the sad accident of timing that has befallen us as far as this Bill is concerned. Like her, I would have felt a lot better if the report of which I have been privileged to be part could have been received, with its recommendations understood, so that the Bill could have been sent to the Commons complete and with the work done. Be that as it may, I hope that when the report comes out Members will be satisfied with its recommendations.

In her introduction, my noble friend said that she was looking forward to seeing how the Government’s thinking had changed over the summer. What has been very striking is how the thinking of charities, and perhaps particularly of some charities’ trustees, has been influenced over the summer by focus on the negative aspects of fundraising. If they did not get it before, many of them get it now—and not before time. I hope that the report will be influential and welcomed and will make not only charity staff and chief executives but trustees much more mindful of their responsibilities in regulating their fundraising activities. Too many trustees have been content to take the money without being too fussy about how that fundraising has been achieved.

Wearing another hat, I chair the Professional Standards Authority for Health and Social Care. We have a concept of right-touch—not light-touch—regulation. We say that, amongst other things, right-touch regulation should be proportionate, consistent, transparent and accountable. I hope we can achieve that with charitable fundraising and, most of all, that in the future it will be far more effective.

[Lord Moynihan (Con)]

My Lords, in the context of the regulation of funding and the regulatory framework for charities, I have a brief question for my noble friend of which I have given him notice. On Report, my noble friend gave a number of commitments to the noble Lord, Lord Wallace of Saltaire, myself and the whole House on the question of public benefit. A lot of work has been done on this during the summer. He said that the Charity Commission would issue new guidance on public benefit and running a charity, that it would do further work on public benefit reporting guidance, that the ISC was going to provide guidance, that the Charity Commission would undertake a 12-month research programme and the ISC would launch a website this autumn. All of that would then be subject to a debate a year on, when the House could see how much progress was being made.

It is appropriate to mention to the House that a lot of work has been done. I could not be more grateful personally, and all those interested in the subject will also be grateful to the ISC and the Charity Commission for a very good start. We hope that, as the Opposition Front Benchers made clear during the latter stages of the debate, the website will be proactive regarding the facilities and engagement with local communities and be a point of contact—an effective method of linking with their local communities schools with charitable status and outstanding facilities.

I am certain that noble Lords in all parts of the House will continue to push for change not just in the sports world but in the arts world, and for engagement between schools that are endowed with superb facilities, excellent teachers and coaches, and the wider community. I would therefore be grateful if the Minister took this opportunity to update the House on the work undertaken during the summer and join me in offering congratulations on the good start, although there is clearly a long road to travel before we achieve the sort of developments that are essential to meet the mood expressed in the House in a number of previous debates. We must ensure that we have the material necessary to have a full debate in a year’s time.

Charities (Protection and Social Investment) Bill [HL]

Baroness Pitkeathley Excerpts

Monday 20th July 2015 Lords Chamber

[Baroness Pitkeathley (Lab)]

My Lords, I want to speak in favour of the insertion of the proposed new clause, and declare an interest as a former chief executive and now vice-president of a campaigning charity, Carers UK.

Last week, I gave a lecture on 50 years of the carers’ movement in which I argued that the fact that carers, their needs and their contribution are now so widely recognised is due almost entirely to the work of campaigning charities such as Carers UK, which have enabled the carer’s voice to grow strong and influential in bringing about policy change. Just to support what my noble friend Lady Hayter said about leading the world, I say that the carers’ movement is indeed an example to the whole world; it is in contact with emerging carers’ movements throughout the world and is a global influence.

I want to ensure that such organisations are confident in the legitimacy of their actions, whether it be campaigning for a change from which all will benefit or opposing a proposed change which is likely to disadvantage that client group. I know that it can be said there is nothing which currently inhibits such action on the part of charities and I believe that the Charity Commission may revise its so-called CC9 guidance to make sure that this is understood. However, like my noble friend, I believe that the passage of the lobbying Act has had the effect—I know that it was not the effect that was necessarily intended—of limiting campaigning by charities. We saw this clearly in the run-up to the general election, where charities did not have the strong voice that we normally expect at such times. It has made charities nervous; it has diminished their confidence. The insertion of the proposed new clause would go some way to remedying this situation and re-establishing that confidence. I emphasise that I want that confidence to be re-established not for the benefit of the charity but for that of the recipients of that charity’s services, by influencing policy in the way which is such a proud tradition in our country.

[Lord Lea of Crondall]

My Lords, in supporting the amendment, perhaps I may revert to a point which came up in Committee. It concerns what exactly we are to believe is the position under the present law.

The noble Lord, Lord Wallace of Saltaire, gave a long disquisition on party political support—which we knew was not charitable—but there are many examples of where the objection “this is political” is used against the registration of charities which in no sense are party political. The charity that I have been the chairman of is an example which your Lordships have heard about possibly to the point of tedium, but it demonstrates the fact that the dividing line at the moment is drawn in a place which the Government say is different from where it actually is drawn. It is drawn somewhere in the murky middle by arbitrary and subjective decision by the Charity Commission, which is dangerous for its credibility.

I have raised the example of an anti-EU charity putting out in a press release a narrative beginning, “In the latest outburst from the gauleiter of the European Commission, Mr Juncker”. As I pointed out, “gau” and “leiter” are two quite straightforward German words—“gau” means district and “leiter” means leader—and until 1933 there was nothing wrong with “gauleiter”. But ever since 1933, there has been a lot wrong with “gauleiter”. And so that is not political. How on earth can the Minister defend the arbitrariness and subjectivity of the commission when it pronounces that it objects to the Hammarskjöld inquiry commission on the grounds of it being “political” and says not a word about other charities which find favour with it?

Charities (Protection and Social Investment) Bill [HL]

Baroness Pitkeathley Excerpts

Monday 6th July 2015 Grand Committee

[Baroness Barker (LD)]

My Lords, it may be useful if I speak to Amendments 21 and 22. Like the noble Lord, Lord Watson of Invergowrie, we are seeking to make the concept of social investment clear in legislation. Part of the aim of doing so is to make sure that social investment policies sit alongside the overall investment policies of a charity and are treated in much the same way.

Our first amendment, Amendment 21, seeks to delete “social” in subsection (3) of new Section 292C. This is one of those cases where a deletion is meant to lead to more inclusivity, so in fact we are suggesting that all a charity’s investments should be the subject of a periodic review. Amendment 22 seeks to ensure that trustees are under an explicit duty to make their investment policy available publicly to their donors and beneficiaries.

One of the big challenges of social investment is that, by its very nature, most of the time it is unlikely to bring about significant financial return. For example, if a charity invests in a business to be carried out by its beneficiaries—for example, former prisoners and so on—any such business is unlikely to turn a profit in the first few years of its existence. Therefore, it is doubly important that charities are able to do double accounting—that is, they have to be able to explain to the public what has happened to the financial return and also how they have calculated the social return or the return in terms of the benefits to them in furthering their charitable objects.

I happen to be of the school that says that there ought to be a greater degree of transparency overall regarding charity investments. Sometimes in our sector, charities can be somewhat fearful of being attacked for the sorts of investments they have to make in order to obtain a financial return. With the development of social investment, there is a need for charities to up their game across the board, and therefore such transparency would be helpful.

I also agree with some of the points made by the noble Lord, Lord Watson of Invergowrie. The term “from time to time” is probably a well-understood legal phrase: it is something that should happen but it is difficult to put an exact timeframe on it. Some investments will take place over a long time, and therefore an accounting period of three years would not make sense for charities. Equally, the point made by the noble Lord, Lord Watson, that they must be reviewed stands. Therefore I, too, shall be interested to hear the Minister’s reply, and I hope that between us we can flesh this out to make it just a bit clearer.

[Baroness Pitkeathley (Lab)]

My Lords, I support all these amendments because they encourage trustees to focus more attention on the progress of social investments and to review them regularly. I, too, think that “from time to time” is a bit vague, although I understand that it has a legal meaning.

There are two reasons why I support the amendments. The first is that I think they will make the position of trustees and their responsibilities clearer. Social investment is a fairly new concept and trustees on the whole are not very familiar with it. We are trying to encourage them to be more so, and I believe that these amendments would help in that. The second reason—and here I declare an interest as chair of the Big Society Trust—is that I agree with the noble Baroness, Lady Barker, that the financial return on these social investments is often not realised for some time, although the social return may be obvious at an earlier stage. To some extent, charities and trustees are learning as they go in this area, so any further guidance or direction we can give them would be of benefit.

[The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)]

My Lords, I thank noble Lords for tabling these amendments, which raise interesting points, and I hope that I will be forgiven for going into a little detail on our thinking around them.

Once again, I think we agree on the need for transparency and accountability. It is important to ensure that charities take the opportunity to review all their actions from time to time with the intention of ascertaining how effective those actions have been. This should apply to their grant-making activities no less than their financial investments. It is also desirable for charities to be suitably transparent in reporting. Public-facing organisations should aim to explain how they operate, and I share your Lordships’ wish to encourage as much openness and information sharing as is practicable.

However, while I support these intentions, we must be careful not to overburden charities by mandating the collection and publication of information to an extent that could distract from their core activities. This must be the case in particular for the large number of charities that are small and may not have the requisite capacity or capability—the “little platoons” I referred to on Second Reading. Charity trustees have overall responsibility for the investment of their charity’s funds. They must make the strategic decisions about how to use a charity’s assets to achieve its aims.

In relation to financial investments, charity trustees are already under a legal duty to keep their investment portfolio under regular review. Those reviews must cover how their investments are performing, and if an investment manager is used, the service provided by that investment manager. Trustees should also monitor and review their internal arrangements for managing the charity’s investments. In terms of the regularity of the review, the trustees may decide to hold reviews at specific intervals or they may decide to hold a review in response to a specific event, for example if there was evidence of inadequate performance of an investment or if there was a sudden change in the economic outlook. This seems appropriate and allows charities to respond flexibly to circumstances rather than impose a rigid timetable.

The phrase “from time to time” is indeed understood among the legal profession and is explained in case law. The commission’s guidance on investments covers what it means. Given the existing requirements to review financial investments regularly, it would be beyond the scope of this Bill to impose duties to review social investments on the far wider range and greater number of investments in the general sense. Furthermore, in addition to requirements to review investments, there are also a number of disclosure requirements in relation to financial reporting by charities. Any charity with a gross income greater than £25,000 must submit its audited or independently examined accounts to the Charity Commission on an annual basis.

In addition, there is the charities SORP—a nice word—contained in Accounting and Reporting by Charities: Statement of Recommended Practice, which, as I am sure noble Lords know well, sets out the recommended practice for the purpose of preparing the trustees’ annual report and for preparing the accounts. The recommendations of SORP supplement accounting standards, thereby providing an even stronger basis for reporting. The statement of recommended practice deals expressly with the reporting of social investments. As social investments are different from financial investments, the reporting criteria should not and cannot be equated; they should instead be tailored.

While I am extremely keen to see charities taking greater steps towards impact assessment, thereby enabling them to think about their total impact in the round, imposing specific new rules via statute would seem too blunt an approach and potentially a highly burdensome one. It would seem to place a greater requirement for assessing the impact of social investments than currently exists for grants, spending or financial investments. This might have the unintended consequence of making charities less likely to make use of social investment—the opposite of what we are trying to achieve, particularly at this early stage of market development.

--- Later in debate ---

[Baroness Pitkeathley]

My Lords, I must take issue with the statement from the noble Lord, Lord Wallace of Saltaire, that the teaching in public schools is always better than that in state schools. I might well take issue with that but I certainly do not take issue with the fact that they have much better facilities, and that is what this is really all about.

We do not need to rehearse yet again the long-standing and tortuous arguments about what constitutes public benefit. In my intervention last week about funding the Charity Commission I talked about the quid pro quo that charities would expect in return for contributing to the funding of their regulator. Here we focus on another quid pro quo: in addition to the huge advantage that charitable status confers, independent schools are encouraged to further engage with local communities and make their facilities available for sports and arts purposes. Noble Lords have acknowledged that there is a lot of this about. There is some very good practice and it relates not only to the last Charities Bill. I remember that when I chaired the New Opportunities Fund, which did a great deal of work putting lottery money into schools, there were some excellent examples of co-operation between public and state schools. As we have heard, though, it is very patchy. Too many of the sharing facilities and projects that go on are dependent on the history of relationships between that school and its local community. Even more concerning is that they are sometimes dependent on relationships between individuals, usually teachers. This is not satisfactory.

Facilities and coaching are important, as we have heard, so far as sport, arts and music are concerned, and they are disproportionately available in the public school sector. Only this morning, we heard that the Olympic legacy has not been realised so far as participation is concerned, and too many independent schools think it sufficient to say that facilities are available to local communities whenever their own students do not need them or they are not in use. When one headmaster was asked when the facilities were available, he said, “Any evening after 9 pm or any bank holiday, but funnily enough no one seems to want them then”. Quite.

I very much support these amendments. The only anxiety I have is one that we have raised many times before in this Bill—the issue of giving the Charity Commission more responsibility without increasing its resources. This is quite a heavy policing function that would be placed on it, and that will need to be taken into consideration, but I support the amendment.

[Lord Lexden (Con)]

My Lords, I declare my interest as a former general secretary of the Independent Schools Council and as the current president of the Independent Schools Association and of the Council for Independent Education. As I recite these names, it perhaps gives an illustration of the diversity that exists in the independent sector, which, viewed from the outside, is often depicted as a rather monolithic affair determined to keep on its own side of a Berlin Wall. Nothing could be further from the truth, as this debate so far has indicated.

I am very glad indeed to hear the acknowledgements of the widespread support that is given by the Independent Schools Council to the growth of partnership activity. The results are summarised in a publication called the ISC Annual Census 2015. A great deal of detailed material is going to be made available in September on a website Schools Together, which will give a great wealth of case studies and examples of what schools are doing in sharing facilities with their local communities and state schools. It will be an extensive website because there is so much to record.

I think the issue comes to this: is there a role for the law in this matter? We are at one in acknowledging that much has been done. I stress the ISC’s continuing encouragement for the further expansion of such schemes and have very serious concerns about the implications of an attempt to specify how independent schools that are charities should demonstrate public benefit. All charities are of course required to provide public benefit. Would it be right to single out independent schools for specific guidance on what they should do? I also question whether this would be expedient because schemes for sharing facilities that are likely to succeed will do so when they reflect a deep and genuine desire on the part of state schools, local communities and independent schools to be involved in them.

Local wishes should determine what happens. It is important to remember that independent schools vary greatly in size and character. More than 50% have 350 pupils or fewer. Only a tiny minority have large endowments; the vast majority are wholly dependent on fee income. What they can do will vary from place to place depending on size and on how local communities and state schools wish to work with independent schools. I emphasise that the 1,200 schools belonging to the Independent Schools Council are keen to work with local schools and communities, contributing to the activities of local communities and work in state schools. These things are innate to them these days, forming part of the charitable ethos and purpose of the schools.

If partnership schemes are to deliver benefits to all involved—local communities, state schools and independent schools, which are enriched by partnership—I suggest that the best course is to give every encouragement to voluntary local arrangements and not seek to impose a set of requirements across the board, which I suppose would be known these days as a one-size-fits-all approach.

Charities (Protection and Social Investment) Bill [HL]

Baroness Pitkeathley Excerpts

Wednesday 1st July 2015 Grand Committee

[Baroness Hayter of Kentish Town (Lab)]

My Lords, the amendment stands in the names of my noble friends Lord Watson of Invergowrie and Lord Lea as well as my own. It essentially restates the current legal position, as it is well established in charity law that campaigning and political activity can be legitimate, indeed valuable, for charities, provided that they are undertaken to achieve their charitable aims.

The Charity Commission’s guidelines on campaigning and political activities, known to us in the field as CC9—technically called “speaking out”—recognise that there may be situations where carrying out political activity is the best way for trustees to support the charity’s purposes. Indeed, charities have used the opportunity of elections to promote their charitable objectives for more than 100 years to raise concerns and gain attention for their charitable aims. It is clear that, although a charity cannot exist for political purposes, it can campaign for a change in the law or a change in policy, or on decisions where such a change would assist the charity’s objectives. Charities can also campaign to ensure that existing laws are observed.

However, following the transparency of lobbying Act—I am delighted to see here the noble Lord, Lord Wallace of Saltaire, whom we would say was the guilty party on that Act—we know that there is a very difficult interplay between charity law and electoral law, particularly over non-party campaigning rules. There is insufficient clarity now on whether and when awareness-raising on policy and legitimate non-partisan campaigning by charities would be regulated by the Electoral Commission, even where activities were not intended to have any electoral effect.

The NCVO is therefore concerned that charities could be deterred from engaging in public policy and speaking out on behalf of beneficiaries during election periods. With local, European, devolved and general elections, we seem almost always to be in an election period.

The NCVO wants charities to have maximum clarity as to what comes within the scope of the non-party campaigning rules, so that legitimate campaigning is not inhibited. We share that aim. The problem is that the recent Act broadened the definition of what counted as political expression while reducing the threshold at which organisations caught by the new definition had to register with the Electoral Commission. They thus have to comply with more red tape than most businesses seem to have to do in a year.

Indeed, the Act represents a radical change to the regulatory environment for charities, and it has constrained, if only by a chill factor, charities’ legitimate activities. When the then Bill was in the House, the noble Earl, Lord Clancarty, feared that it would,

“put Westminster further into a bubble”,—[Official Report, 22/10/13; col. 923.]

by cutting out a much-needed source of intelligence to SW1. We think that this has happened.

More than that, the Act increases the imbalance between the controls on commercial lobbying and similar activities by charities on behalf of those with the least access to decision-makers. Not only can well-heeled drinks or defence companies have free rein to lobby, to campaign and to further their interests, so can groups, such as the TaxPayers’ Alliance, which has a clear campaigning rule. However, because they are not charities, they face no regulatory or transparency rules.

We wholly concur that a charity’s sole purpose should not be to campaign, must never be party political, nor involved in the electoral process, and that they should campaign only to achieve their charitable aims. The charities believe that they have been unfairly treated by the new Act and are genuinely bemused by such treatment, given that every political party, including that of the Minister, purports to support the work of charities. Indeed, many parliamentarians from across the political spectrum are actively involved in at least one charity.

The NCVO reports that confusion over the law is now widespread, leading to charities unduly self-censoring. For example, the charitable arms of two well-respected churches, which both provide an extensive network of social care and have advocated for policy change for over 150 years on behalf of the people they support, have come to different conclusions about what advocacy they can now undertake, how they do it and how to account for it. They are confused about what counts as controlled expenditure and are fearful that the new legislation means that almost anything that a charity or coalition does to advocate policies in the year before an election might be judged to impact on the success or failure of a particular party or candidate.

Indeed, trustees of some charities appear so scared of infringing the rules, as well as being bemused by the difficulties of calculating staff costs, particularly geographically, that they have stopped the charity from campaigning. Others have reached a different conclusion and have decided to risk running outspoken campaigns on the grounds that, as they make the same points to whoever is in government, they are not seeking to influence any one party.

What is most worrying for democracy is those other charities which feel that they cannot risk advocating on behalf of their charitable aims or their charitable beneficiaries. It is surely wrong and, due to the uncertainties created by the lobbying Act, some charities believe that they cannot speak up on behalf of their users or campaign to achieve their charitable objectives. Decision-makers lose that input and the voiceless lose their advocates, and this is in a democracy like ours, which is such a strong and vibrant civil society.

The intention of the amendment is clear; that is, to give confidence to trustees that the existing legal position remains untouched by the lobbying Act. They can undertake campaigning or political activity in furtherance of their charitable purposes. They can campaign to build support for, or oppose, a change in the law, the policy or the decisions of central government, local authorities or other public bodies. I beg to move.

[Baroness Pitkeathley (Lab)]

My Lords, I support this amendment and speak as the former chief executive of Carers UK, a very successful campaigning organisation, which, arguably, could be credited with making caring and carers, once an entirely private matter, the public issue that we all recognise today. I submit that that came about almost entirely through the campaigning of the carers’ organisations. I very much agree with my noble friend that there is now confusion, since the lobbying Act, about what is legitimate and what is not so far as charities are concerned at election periods.

At present, we do not have the maximum clarity which my noble friend has called for. I draw the attention of your Lordships to the lack of profile which charities had in the recent general election. In the past, it was commonplace for charities or groups of charities to hold hustings at which all parties could set out their wares. We heard very little of that in the last general election.

I hope that the Minister will confirm that he supports the rights of charities to campaign for policy changes which will benefit their client group. Of course, that could be called political—changing policy is political—but it is very much small-“p” politics, not party politics, and charities are very much aware of that.

[Lord Judd (Lab)]

My Lords, I am very glad that this amendment is before us but I noticed that in introducing it my noble friend emphasised very heavily that it was not endorsing in any way the concept of charities becoming involved in party-political activity. I was glad that my noble friend Lady Pitkeathley also made that point.

I want to speak very honestly as a former director of Oxfam in the 1980s, when we were campaigning very hard to get a change in charity law. We had quite a skirmish with the Charity Commission at the time. It was done in a gentlemanly way but very firmly by the commission, which was quite right, and in the end the laws on campaigning were rewritten and we could have almost dictated word for word what the new regulations said because they were exactly what we were after.

What was happening in Oxfam, as I saw it, was that the charity was maturing and growing up. It was saying, “We can’t go on simply alleviating poverty or whatever because in doing that we may be condoning the causes of what we are dealing with. We are repeatedly putting fingers in the dyke without seeing that it is the dyke itself that is crumbling or which is the problem”. There was a very strong feeling developing among staff and trustees—and the trustees held very firm on this, which I found very encouraging—that we were being dishonest: that in our work we were coming up against the real causes of the issues we were encountering and, in order to not just alleviate the consequences but deal with the causes, we had to spell out what we had come to see as the causes.

I think I have shared this personal anecdote with the Committee before so I hope I can be forgiven for mentioning it again. Once when I was on a visit to Latin America at a very difficult time to visit our programme there, I had a very long and interesting conversation with the Bishop of San Cristobal, who was bravely standing up for the Indians in Chiapas who were under terrible pressure. He was being denounced by the Government of the time and so on. It was quite ugly, with people disrupting his church services and standing outside his little house shouting all night, but he was just getting on with the job. He spoke fluent English; he was a really strong man. I asked him, “Have you got a message that you would like me to take back to the UK, to my staff colleagues and my trustees but also more widely in Britain?”. He said, “Yes, I have”. He made several points but the point I shall always remember is that he said, “In situations of this kind, you cannot be neutral. I believe that solidarity is the real meaning of charity”. If you are getting into a position of solidarity with the people you are trying to help, you must recognise that they are talked about a great deal, they are talked to a great deal, but in the major debates that are taking place that affect policy who talks for them? Of course, that is one step short of talking for themselves in those debates.

I was very privileged to have held that post in Oxfam. I came away from my time in it absolutely convinced intellectually and emotionally that if a charity was to be true to its purposes and was dealing with really severe social problems, one of its most important tasks and one thing it should never equivocate about was advocacy—to speak out about the issues that it had discovered in its work were the real issues. Of course, that is not always comfortable but it is absolutely essential to integrity. We received terrific support. We relied in those days on a widespread constituency support, and regular giving from the wider public increased while we were making this stand. Clearly many people in the country agreed with our position. It is a tremendous achievement and of great credit to the Charity Commission of the time that it took the point and amended the laws on campaigning. We must stand firmly by that because it could become easily eroded.

--- Later in debate ---

Moved by

[Baroness Pitkeathley]

15B: After Clause 12, insert the following new Clause—
“Review of Charity Commission’s funding arrangements
The Secretary of State must order a review of the Charity Commission’s funding arrangements and look into different options for funding.”

[Baroness Pitkeathley]

My Lords, I again declare my interests as vice-president and patron of several charities, co-chair of the All-Party Group on Civil Society and Volunteering, a member of the advisory body of the NCVO and, especially in relation to this amendment, chair of the Professional Standards Authority, the overseeing authority for the nine health regulators, such as the GMC, the NMC and the GDC.

Throughout our deliberations on the Bill, concern has been expressed about giving more responsibility and powers to the Charity Commission while not providing any additional resource. Indeed, the commission has seen a considerable cut in its resources over the years. So this amendment, and I stress that it is very much a probing one, calls for a review of its funding. I am certain that we all—beneficiaries, government and charities themselves—want from the Charity Commission the assurance that it can do its job and, further, to be assured of its competence to do that job and its independence in the way that it carries out its functions.

In view of the cut in its funding and of the criticism, sometimes harsh, that it has faced about its competence, the Charity Commission has concentrated, perhaps understandably, on its core function: its regulatory or policing function. In my view, this is a pity since what is most valued by the charitable sector, particularly small charities—we have heard many times that most charities are indeed very small—is the commission’s advice and guidance as well as its regulation. The role of regulation, after all, is not just about policing but about maintaining professional standards in the interests of public protection. This is very familiar to me in my role as chair of the Professional Standards Authority.

This probing amendment seeks to encourage the Government to look at other ways of funding the Charity Commission in order to ensure that its role includes advice, information, support and other services that those regulated should be able to expect from a regulator. I start from the assumption that no further money will be forthcoming from the Government, which seems a safe enough one in this climate, though if the Minister would like to disabuse me of that idea I would be delighted; I would be very glad to be corrected if more money were coming from the Government.

The review that I am suggesting would take the widest possible look at all the funding options, but I am going to concentrate here on one particular option. One other way to be considered could be for the regulated to contribute to the funding of their own regulator, which is how most other regulators get their income. My own organisation, the Professional Standards Authority, which provides not actual regulation but oversight of the nine health regulators, is shortly to be funded by a levy on the organisations that we oversee, based on a per-capita calculation of the number of registrants. I am aware that it is one thing to charge a nurse, doctor or dentist a fee for a registration that allows them to practise but quite another to take things from money raised from charitable donations. However, not all charitable income comes from charitable sources, and even the lowest-paid nurse knows that it is a condition of his or her practice to be registered, and that for that registration you have to pay a fee.

Let me be clear: I am not suggesting that paying fees to the Charity Commission should be a condition of regulation for all charities. The review that I am suggesting would of course have to look at exemptions from contribution, and I suggest that a very high threshold would have to be set. I think that the commission itself has suggested a £100,000 a year income, but in my view that is not nearly high enough and the threshold would have to be much higher—say, income of £1 million before any fees were charged, and then there would have to be a sliding scale.

Moreover, no Government could bring in such a scheme without significant quids pro quo being established if this suggestion were to be at all acceptable to the charitable sector. One of these would certainly be the guarantee of the independence of the commission, as all the regulators with which I am familiar have—they are guaranteed independence. We call the Charity Commission independent at present, but does it pass all the tests for an independent body? It is answerable to the Government of the day, not to Parliament; it is dependent for virtually all its funding on government; and the way in which it appoints and reappoints its trustees has been called into question, with the Government’s influence over that possibly being too strong. In my experience it is unusual, to say the least, for an independent body to have staff in the Box advising the Minister on a Bill of which it itself is the subject. So we would need more assurance about the independence of the Charity Commission if we were even to think about going down this road.

Another change which could and should be suggested about the governance of the Charity Commission in return for a change in the way it is funded is more connection with the beneficiaries of charities—the consumers of their services. The focus of all the other regulators with which I am connected in my role at the PSA has been radically altered in recent years and their governance has been changed to reflect this. The change has been to ensure that their primary role is protection of the public, not defence of their registrants. There is surely a case for making it similarly clear that the regulation of charities is a means to an end, not an end in itself. The end must be the protection of the beneficiaries—the receivers of the services of charities. Accordingly, along with contributing to the resources of the Charity Commission, the charities themselves should be assured that their beneficiaries would in some way be represented in the governance of the Charity Commission; if not on the board, then for example through an advisory or reference group.

--- Later in debate ---

[Lord Bridges of Headley]

My Lords, I welcome this debate, prompted by the amendment of the noble Baroness, Lady Pitkeathley, who, as the noble Baroness, Lady Hayter, has just said, has extensive experience of this sector. I also welcome, as did my noble friend Lord Hodgson, the chance to climb on my horse and canter around this terrain once again. It is important that we debate these issues and I can see that there are a number of them here. On the one hand there is the independence of the commission but on the other, much more fundamentally, there is the question of its funding.

Before I turn to the future, I shall talk first about the present and where we are today. It is important that we put the debate on funding in the context of recent history. As the Committee knows all too well, in its critical 2013 report on the Charity Commission the National Audit Office found that the commission had,

“no coherent strategy for delivering clearly defined priorities within its broad remit”,

and:

“The Commission does not know how much its activities cost and has not focused its resources on its priorities”.

Those are pretty damning words, as I am sure the Committee will agree. Under the leadership of William Shawcross and Paula Sussex, the Charity Commission is making good progress in addressing these weaknesses. I pay tribute to their leadership and that of the commission’s board. Equally important, I also recognise the commitment and hard work of the staff at the Charity Commission who strive, day in and day out, to ensure that charities are properly regulated and get the service they require.

The National Audit Office undertook a follow-up report on the Charity Commission which came out in January 2015. The report found that the commission has made good early progress in addressing all of the recommendations made by the NAO and the Public Accounts Committee and has put in place a credible programme for change. That said, it also pointed out that there is still some way to go.

The Charity Commission’s 2014-15 annual report, which was laid before your Lordships’ House yesterday, demonstrates some of the progress it has made in its compliance work, for example, and in a number of other areas. It reports that in 2014-15 the commission opened 103 new investigations and used its enforcement powers 1,060 times—up from 64 and 790 respectively in 2013-14. Equally as important, the commission also continues its enabling work through permissions casework, providing online services to charities, and through guidance and engagement to support trustees in fulfilling their legal duties when managing their charities. In the commission’s first contact alone, it dealt with over 57,000 calls, 55,000 emails and granted over 2,500 permissions last year. It continues to refine this work with an aim to provide an “efficient, fuss-free service to charities”. So we are seeing good and positive progress from the commission in becoming a more effective and efficient regulator.

However, as has been discussed, the question of funding is a valid one and I share the noble Baroness’s wish to ensure that the regulator is properly and sustainably funded. I am sorry to disappoint the noble Baroness but I am not able to shake a money tree and magic up a large cheque for the Charity Commission. This is because the Government remain committed to dealing with the record deficit and all parts of government need to contribute to efficiency, including the Charity Commission.

That said, the Government recognise the need for targeted additional resources for the Charity Commission. In October last year, my right honourable friend the Prime Minister announced an £8 million capital investment for the Charity Commission through to March 2017. On top of that, it also received an extra £1 million in funding for 2015-16. This £8 million capital investment will help the commission to refocus its regulatory activity on monitoring and enforcement in the highest risk areas—for example, the abuse of charities for terrorist and other criminal purposes such as tax avoidance and fraud. The commission has said that this significant investment will be spent on technology and frontline operations, allowing it to streamline lower risk work and deploy its resources more effectively to priority work.

So that is where we are. Looking to the future, the Charity Commission’s strategic plan for 2015-18, which was also published yesterday, sets out its four strategic priorities. These are, first, protecting charities from abuse or mismanagement; secondly, enabling trustees to run their charities effectively; thirdly, encouraging transparency and accountability; and, fourthly—this is the matter that concerns the Committee—operating as an efficient and expert regulator with sustainable funding. Under the heading of that fourth strategic priority, the commission has committed to consulting on proposals for alternative funding options, including an annual charge for registered charities.

The strategic plan also makes it clear that the Charity Commission cannot devote the same level of resource to each of its statutory objectives as it previously could. It accepts that means changing the way it operates, allocating resources by relative priority and risk, and working with partners. The commission is looking at various options. However, I should stress that there are no plans in place yet. The commission’s chairman, William Shawcross, has been meeting the chief executives of a number of charities to raise the idea with them and listen to their thoughts. Of course there are those who have concerns. The commission is listening to them and will consult more widely as its plans develop.

As the noble Baroness, Lady Hayter, has illustrated, there is a wide range of views on this subject already. The Populus research that she cited found that the majority of the public—69%, as noble Baroness said—believe that charity regulation should be partly or fully funded by charities themselves. A significant minority of charities—23%—agree with this, while the majority of charities believe that charity regulation should be funded entirely through general taxation. Clearly, therefore, discussions must continue with the sector to see where there is shared ground. Of course, Parliament would want and needs to be involved in any debate, and I know that some of your Lordships have already fed in your thoughts and have expressed them today. Section 19 of the Charities Act 2011 would enable charging to be brought in through secondary legislation, but importantly and crucially, it provides for parliamentary scrutiny of any charging proposals and requires the affirmative resolution procedure.

The issue of independence was raised and whether, if charities are to pay for their regulation, we can ensure that the Charity Commission is independent of government. This again raises questions about the commission’s independence. Its chairman, Mr Shawcross, explored the issue of sustainable funding for the regulator in a speech on 10 June, saying:

“There are indeed very real questions to answer—including how the Commission’s independence, which is so vital, would be protected under such an arrangement”.

We must ensure that the Charity Commission remains independent of government and the sector it regulates, however it is funded in the future.

The funding of the commission is just one strand of ensuring that it is able to be the modern, effective regulator that the public and we all expect. The powers in this Bill are another strand of that. I hope that my response begins to reassure the noble Baroness that we and the commission are committed to ensuring that the regulator has a sustainable funding solution to enable it to regulate charities effectively and efficiently, and that work is already under way to consider the options. With that, I hope that she will feel able to withdraw her amendment.

[Baroness Pitkeathley]

I thank the Minister for his thoughtful response and other noble Lords for their similarly valuable contributions to this short debate. I said that my amendment was controversial; it has also been illustrated that there are many complex issues within it. The debate about how the Charity Commission is funded did not start here and certainly will not finish here. It will be the subject of ongoing relationships. It seems to me that the relationship between the Charity Commission and the sector that it regulates is vital.

I have raised the issue—and the Minister has addressed it—of independence. My noble friend referred to consumer involvement and protection. Those issues will not go away as we look to the future of funding for the Charity Commission, but, for the moment, I am happy to withdraw the amendment.

Amendment 15B withdrawn.

Charities (Protection and Social Investment) Bill [HL]

Baroness Pitkeathley Excerpts

Tuesday 23rd June 2015 Grand Committee

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I remind the Committee of my interests as a trustee of a number of quite small charities. In moving Amendment 2, I shall speak also to Amendment 7, both in the names of my noble friend Lord Watson and myself. As with the next group, these amendments are to improve the safeguarding of children and vulnerable adults, particularly in regard to sexual abuse.

Amendment 2 concerns the power for the Charity Commission to check on disclosure and barring service checks undertaken by charities. It follows concerns raised by Mandate Now, a pressure group supported by the Survivors Trust, which lobbies for mandatory reporting of abuse, and is led by adults who experienced child abuse in establishments that were also charities. Mandate Now told us of a charity providing education; in its inspection report, there were references to failure to return—that is, notifications—but the staff concerned went on to abuse elsewhere. They also told us about a charity providing education where the press reported that the head in that case had phoned a receiving establishment to warn it of an abuser who was applying to work there. However, no formal notifications were found that might have ensured the known abuser would not offend elsewhere, and—this is the important thing—the trustees do not appear to have challenged the head.

In 2010, an inspection report on another educational establishment registered with the Charity Commission said that there was no,

“established policy for reporting directly to ... the Independent Safeguarding Authority, responsible for such referrals … The advisability of making such referrals is now clearly understood even when there may not be a strict legal obligation to do so”.

Our concern is that it is advisable only—there is no compulsion. In the case that I have just mentioned, neither the management nor trustees made any referral to what is now the DBS, which meant that it did not lead to any action. No action was taken about those trustees for not making those reports.

I think we can all agree that notification should not be an optional extra. More than that, the Charity Commission should be able to check that the system is working as intended. Relying on trustees always to do the DBS checks obviously does not always work.

Another example occurred in an educational establishment which happened to be run by a religious order, where the head ignored the enhanced check, which showed a history of child abuse offences for the new chair. It appears to be rather discretionary as to whether trustees act on information provided by the DBS, when there are no independent checks by a third party that the correct procedure is happening. Amendment 2 gives a power—not a duty—to the Charity Commission to undertake such checks.

Amendment 7 covers perhaps the most glaring anomaly in the current law, which is that someone who has got into debt and is subject to an individual voluntary arrangement, or a person with financial misdemeanours behind them, is automatically excluded from being a trustee, but people on the sexual offenders register, who have surely done far worse than run up their credit card debt, can happily serve as a trustee. To date, the Government have said that when something comes to light, or in areas covered by the DBS, such people should be identified. That is not good enough. We do not want to wait until something has happened, or until other trustees get suspicious and then have to act, possibly against someone with whom they have been working closely on the trust. Nor is it sufficient to deal only with charities which obviously are in contact with children, and thus covered by DBS. There may be other examples, such as a church hall that gets used by guides, or for children’s parties. That would not have been covered.

An alcohol misuse charity could decide to run a special programme for the children of problem drinkers or, similarly, a cancer group could offer support to the children of cancer patients. They would not be covered by the current safeguarding regime. Who would think to check on the background of someone, particularly if they were offering to be the treasurer of such a charity? It is a thankless task, as I know. Trustees are all too willing to sign up a suitably qualified person without a thought for their wider background. Indeed, I have had dealings with an accountant who, unbeknown to the trustees using him, admittedly as an adviser rather than a trustee, had been convicted, although not imprisoned because he was having a kidney transplant, as he had been found with more than 1,000 images and videos of child sex abuse on his computer. None of the trustees knew about it.

I know that many trustees are very sympathetic to our proposal to add sexual offences to the criteria that trigger automatic disqualification from being a trustee. Of course we would want a waiver for charities working with ex-offenders which need that input to help them in their work. Those charities would know of the record and there would be no secret.

We also know that many smaller charities, particularly parish charities, depend on hard-pressed volunteers and already find the expanding vigour of the Charity Commission guidelines and reporting somewhat burdensome. Expecting those trustees to think and risk-assess before they approach a new trustee is quite a burden to put on them. Surely the onus should be on the person on the sex offenders register to know they should not, without a waiver, be a trustee. We should not to leave it to chance that someone else would spot it and consider whether it makes them a risk.

This is an opportune moment to add being on the sex offenders register as a category for automatic exclusion, subject to waiver, as this Bill adds terrorism, money-laundering and bribery to such automatic exclusions. I assume that the Government are as concerned about safeguarding children, women and other vulnerable people as they are about debtors and money-laundering. I am therefore very hopeful that this amendment can be accepted. I beg to move.

[Baroness Pitkeathley (Lab)]

My Lords, the noble Baroness, Lady Barker, and the noble Lord, Lord Hodgson, talked about concentrating the mind of trustees. The main attribute of my noble friend’s amendment is to work further on that concentration of the mind. Contrary to the assumptions often made that charities regulated by the Charity Commission are the large household names which have skilled, informed trustees who are offered training and induction, most charities are not like that. They are small, with governance that can be a bit hit and miss for some of the reasons we have heard: the difficulty of getting volunteers and so on. I venture to suggest that the majority have no idea about the Charity Commission and its powers and have a very hazy concept of collective responsibility, which we will discuss in the next group of amendments. History shows us that we cannot take the protection of children too seriously. We must also be aware of the serial, repetitive nature of some sexual offences and of the great skill in deception that sexual offenders often have. I therefore very much support these amendments. However, I am wary of the need for balance, which the Minister reminded us about, so I am very pleased that the amendment acknowledges that some charities need positively to seek trustees with experience of, even convictions for, these offences so that they can be helped in their work of rehabilitating offenders.

Charities (Protection and Social Investment) Bill [HL]

Baroness Pitkeathley Excerpts

Wednesday 10th June 2015 Lords Chamber

[Baroness Pitkeathley (Lab)]

My Lords, I declare my interests as president, vice-president, patron and former chief executive of various charities, as co-chair of the All-Party Group on Civil Society and Volunteering, and as someone who has spent the large part of a very long working life working in or with the charitable sector.

In those roles, I have been familiar with, connected with and at times frustrated by the work of the Charity Commission. I commend the improvements that it has made to its performance over recent years and I support the new powers given to it in this Bill. I would also like to praise the work of the pre-legislative scrutiny committee under the chairmanship of the noble and learned Lord, Lord Hope of Craighead, which suggested improvements to the Bill. The House should also be mindful, as it has been throughout this debate, of the excellent work done by the noble Lord, Lord Hodgson of Astley Abbotts, in his review of the Charities Act 2006, which was an important background to the provisions we now see in the Bill. Of course, like others, I pay tribute to the excellent maiden speech of the Minister, and look forward to working with him as we proceed.

This is a good, useful and welcome Bill. We shall in Committee be able as ever to suggest improvements, strengthening and so on and, as we shall be in the Moses Room, there will be opportunities for useful discussions about the role and future of the Charity Commission, so here I will raise only one or two cautionary thoughts. While I am fully supportive of extending the powers of the Charity Commission to regulate in the interests of public trust, there are dangers about focusing too strongly and solely on the commission’s enforcement role. The commission has an important role too as an adviser, particularly on charity governance.

The quality of charity governance is equally as important in promoting trust in charities as is tackling abuse. It is welcome that trustees will be able to be removed or disqualified, and no doubt we shall have much debate about how judgments are to be made as to the fitness or otherwise of trustees. What is seen as damaging or unfit in one charity might be seen as appropriate by another, especially bearing in mind the huge range in size and type of charity. Many are tiny and run from someone’s kitchen table, as we know. Some are large multimillion pound enterprises barely distinguishable from businesses. We must ensure that in our enthusiasm for propriety we do not damage or interfere with the spirit of voluntarism, which is the lifeblood of the charitable sector. I am sure that your Lordships’ House, in its inimitable way, will be able to achieve this important balance. With regard to the advisory role of the Charity Commission, we should also remember that advice early in the process of registration can head off many a problem at the pass, preventing larger difficulties that need a stronger reaction down the line. In this regard, the new warning power will be very welcome. In my experience, the charitable sector should look to the commission for advice, support and guidance as well as policing.

I am aware that lobbying and campaigning by charities is not the subject of this Bill, but we cannot fail to have noticed that in the recent general election campaigning charities were not as prominent as they have been in the past. That may be because the agenda for the election was less focused on topics of concern to charities, but it may also be due to a certain nervousness about speaking out given the clear disfavour that has been expressed in some quarters about this type of activity, not least in your Lordships’ House this evening. This is of particular concern to me as former CEO of Carers UK, whose campaigning—absolutely non-party-political campaigning—has been fundamental in raising the carers issue to the importance that it now enjoys. As this is Carers Week, I feel justified in reminding your Lordships that we should bear in mind the importance of charities representing the views of underprivileged sections of our society as we examine this Bill

In drawing attention to the role of the Charity Commission as adviser as well as regulator, I am only too well aware of the resources problem that the commission can face. The Bill gives the Charity Commission increased powers but no lasting increase in its budget. Whether in the long term this is feasible is something that we must all—the Government, the charitable sector and the commission itself—be extremely concerned about.

I turn now to the social investment section of the Bill and declare a further interest as chair of the Big Society Trust, which oversees the work of Big Society Capital—a leading wholesaler in the field of social investment. The Bill introduces a power for charities to make social investments and sets out trustees’ duties in relation to social investments. The social investment market has grown significantly, as we have heard, and helped many charities and social enterprises, but too many are not able to access the capital they need. It may be that they are not investment-ready, that loans are considered too risky for a charity to take on, or that the transaction costs are considered too high. Charity trustees have been particularly reluctant to venture into this area. In this regard, the encouragement and support given to trustees in the Bill will be especially welcome.

I also want to draw the House’s attention to the setting up, in a collaboration between the Cabinet Office, the Big Lottery Fund and Big Society Capital, of Access, the Foundation for Social Investment. Through two programmes—the growth fund and the capacity-building programme—Access aims to fill the gap which many charities at present find exists when they try to access social investment for innovative projects that they want to put in train for their beneficiaries. The noble Baroness, Lady Kramer, may be interested in the Access foundation. Finance will be provided that blends grants with loans, which will help to provide reassurance about the risks of this type of finance. The foundation will also be able to make smaller loans, perhaps up to £150,000, and to reduce the costs of those smaller investments. Many charities are nervous when taking on this type of finance for the first time, so the support and capacity building provided by Access will be especially welcome to many charities and perhaps particularly to their trustees.

Social investment never has been and never will be the solution to all the resource problems of the charity sector, especially at this time of growing need for so many of the recipients of charitable services. But it can make a useful and important contribution, enabling charities to be more sustainable and deliver greater impact, so the provisions in Section 13 are very welcome. I look forward to detailed consideration of the Bill in its further stages.

Recall of MPs Bill

Baroness Pitkeathley Excerpts

Monday 19th January 2015 Lords Chamber

[The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)]

The noble Lord, Lord Foulkes, has withdrawn his amendment.

Amendment 45 withdrawn.