Charities (Protection and Social Investment) Bill [HL]

Lord Bridges of Headley Excerpts

Tuesday 2nd February 2016 Lords Chamber

Moved by

[Lord Bridges of Headley]

That this House do agree with the Commons in their Amendments 1 to 7.

1: Clause 1, page 2, line 15, at end insert—
“( ) The Commission may vary or withdraw a warning under this section.
( ) Subsection (2) applies to the variation or withdrawal of a warning as it applies to a warning.
( ) Subsections (3) to (6) apply to the variation of a warning as they apply to a warning, except that—
(a) in subsection (5)(a) references to the warning are to be read as references to the warning as varied, and
(b) the matter to be specified under subsection (5)(b) is any change as a result of the variation in the action previously proposed by the Commission.”

--- Later in debate ---

7: Clause 17, page 20, line 34, leave out subsection (6)

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

My Lords, it is a pleasure to be back at the Dispatch Box to debate the amendments made in the other place to this important Bill. It is good to be in the final lap, so to speak, with the chequered flag fluttering in the distance. I will try to keep my comments brief.

Commons Amendment 1 is a sensible tweak which would enable the Charity Commission to withdraw or vary an official warning issued under Clause 1. The Charity Commission already has powers under the Charities Act 2011 to vary, revoke or discharge its orders, and we consider that the commission should have a similar ability to vary or withdraw an official warning. Any variation of a warning would be subject to the same processes and safeguards as issuing a new warning.

Commons Amendment 2 would remove Clause 9 from the Bill. This is perhaps one area where there has not been the same degree of agreement across the House as is the case for most of the Bill—a rare exception. But the Government’s position on this remains that Clause 9 is unhelpful and could have damaging unintended consequences for charities. The rationale for Clause 9 when it was introduced into the Bill on Report in this House was that it would send a clear signal to the Government about concerns relating to our manifesto commitment to extend right to buy to housing associations. The principal concern was that charitable housing associations could be compelled to sell their assets in a manner incompatible with their charitable purposes.

The Government listened to the concerns raised and, rather than legislate to deliver the right to buy, we reached a voluntary deal with the housing associations. Under the voluntary deal, there can be no question of housing associations being compelled to sell their assets in a manner incompatible with their charitable purposes; nor is there anything in the Housing and Planning Bill that would compel this. I also point out to noble Lords that the Housing and Planning Bill has been brought to this House and this represents the right place to make points about the Government’s housing policy.

Putting to one side the points about right to buy, our main concern about Clause 9 was that such an attempt to reflect the case law in a simple statutory provision would simply not work and would have potentially damaging unintended consequences for charities. For example, it was not clear how the clause would affect compulsory purchase orders or other court or Charity Commission orders. It was not clear what impact the clause might have on charity financial assets and investments. It was not clear how it could impact existing rights such as the preserved right to buy or right to acquire, which benefit 1.4 million housing association tenants. Some of your Lordships may wish to repeat or echo concerns about this issue but, for the reasons that I have just set out, I strongly encourage the House to support Commons Amendment 2.

Commons Amendments 3, 4 and 5 relate to the disqualification provisions in the Bill. Clause 10 extends the effect of disqualification to the most senior executive roles in a charity, normally the chief executive officer and, where there is one, the chief finance officer. We became aware that there was a risk that under the unamended provision, a person employed by a charity but who did not exercise any management function could still be caught. This may be the case in small charities in which only the trustees are involved in the management of the charity. Commons Amendment 3 addresses that in relation to automatic disqualification. Commons Amendment 4 makes the same change in relation to the proposed Charity Commission power to disqualify in Clause 11, where the same problem could otherwise arise.

I should point out that in response to various concerns raised by rehabilitation charities in relation to the Bill’s disqualification provisions, the Minister for Civil Society committed to a period of at least 12 months before the automatic disqualification provisions would be commenced. The Government and Charity Commission will work with rehabilitation charities ahead of implementation to assess the impact of these provisions on such charities, and will seek to ensure, where possible, that the provisions do not undermine their important work.

Commons Amendment 5 was another concession that responded to a point raised by rehabilitation charities. Under the proposed power to disqualify in Clause 11, one of the conditions for the exercise of the power—condition B—is that the individual has been convicted outside the UK of an offence against a charity or involving the administration of a charity, which, had it been in the UK, would have automatically disqualified the individual. Under Clause 11, the commission would be able take into account only an overseas conviction that is not spent under the law of the territory concerned, where the conviction took place. Rehabilitation charities pointed out that it would be more proportionate if this limitation related to the UK rehabilitation period for an equivalent UK sentence, rather than the rehabilitation period of the overseas jurisdiction. Commons Amendment 5 makes that change.

When the charities Bill was last discussed in your Lordships’ House, there was much interest in and support for strengthening the regulation of fundraising. Noble Lords will remember that in response to last year’s fundraising scandals my honourable friend the Minister for Civil Society, Rob Wilson, asked Sir Stuart Etherington, the chief executive of the National Council for Voluntary Organisations, to chair a cross-party panel tasked with exploring whether the system of fundraising regulation as a whole is the right one. I once again express my particular thanks to my noble friend Lord Leigh of Hurley, the noble Baroness, Lady Pitkeathley, and the noble Lord, Lord Wallace of Saltaire, who all forsook their deckchairs to spend much of last summer deliberating on this question.

I am pleased to say that the Government accepted the recommendations of the Etherington review. Charities have one last chance to show that self-regulation is the appropriate way to govern fundraising. I am very grateful to my noble friend Lord Grade of Yarmouth for agreeing to act as interim chair and set up the new fundraising regulator. I am sure that noble Lords will join me in congratulating him on his new role and wishing him well for this important endeavour. I also take this opportunity to draw your Lordships’ attention to the Public Administration and Constitutional Affairs Committee report on charity fundraising, which was published last week. I welcome its main finding, namely that charities must seize this opportunity to show that self-regulation can work effectively. The Government will consider all the committee’s recommendations and respond in due course.

That brings me on to Commons Amendment 6, which seeks to extend the existing reserve power to regulate fundraising in Section 64A of the Charities Act 1992 and should act as a safeguard if self-regulation fails. It would do so in two main ways. First, new Section 64B would enable regulations made under Section 64A to prescribe a fundraising regulator with which charities must register and pay fees, which would have to be set in line with regulations, comply with the regulator’s requirements and have regard to its guidance. The second element is in new Section 64C, which would enable regulations to confer the power to regulate fundraising on the Charity Commission. It would enable the commission to subcontract day-to-day delivery of fundraising regulation while retaining overall control, and enable fees to be charged under Section 19 of the Charities Act 2011.

As the Minister for Civil Society said in the other place, he hopes that these powers will not be needed and that charities will get behind self-regulation and make it work. I am happy to report that many of the largest fundraising charities have already said that they will commit to the new system by registering with the new body which my noble friend Lord Grade is setting up. I commend them for their initiative and dedication to reforming charitable fundraising in such a way, which will safeguard the interests of the public and beneficiaries alike. The extended reserve powers sought in Commons Amendment 6 send a clear signal regarding the Government’s intention to see better regulation of fundraising in future. Fundraising regulation can no longer be allowed to be governed by vested interest or to turn a blind eye to free riders and those seeking to exploit the extraordinary generosity of the British public. The changes made to the Bill in Commons Amendment 6 will ensure this and I hope that noble Lords will join me in supporting it.

Finally, I turn to Amendment 7. This is the standard-form provision added on Third Reading in this House to avoid issues of privilege. Privilege issues would otherwise arise because the Bill authorises expenditure and charges, which are set out in the Ways and Means resolution. In accordance with standard procedure, the privilege amendment was removed at Commons Committee stage. There ends my canter through these amendments. I hope that your Lordships will support the Commons amendments, and I beg to move.

--- Later in debate ---

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I should like to join others and pour a little more honey over my noble friend’s head and over the head of the Bill team, which has worked hard to bring the good ship into harbour. I shall focus on Amendment 6 and I congratulate the Government on that amendment and the fundraising aspects of it. I urge them to keep up the pressure and wish my noble friend Lord Grade every success in this difficult task.

It is important that we are trying to strike a balance here, which is quite rightly focused on the public not being unduly hassled and being asked in the right way. That is absolutely appropriate, but we must not lose sight of the charities’ right to be able to ask, because if they cannot do so, the effect on our charitable sector, which is vital to our civil society, will be quite extreme. When I carried out the review for the Government a few years ago, it was clear that that balance had not been reached appropriately, given the alphabet soup of regulatory bodies and the different types of fundraisers who blame each other for their bad reputation, along with the fact that the public were confused and wanted a single point of contact. In my report, which was sent to Ministers in July 2012 and accepted by Ministers, I suggested a six-month deadline. Three years later, last summer, as the noble Baroness, Lady Hayter of Kentish Town, pointed out, we had the flashpoint over fundraising, caused by the sad case of Olive Cooke. I congratulate Sir Stuart Etherington and the Members of your Lordships’ House who took part in that review. I think they have come up with some excellent proposals. But this is the last chance of the last chance of the last chance saloon; we have been around this now two or three times.

I am not in favour of statutory regulation against a rapidly changing scene. However, I have to say to my noble friend and to the Minister that in my conversations with the sector there remains a distressing tendency still to see this as somebody else’s problem—still to say, “We are a charity and our reputation is everything, therefore we wouldn’t do anything wrong and how can you possibly think that we are doing anything wrong?”. It is an issue that has still to be hammered home in certain parts of the charity sector to make sure that the message gets over. The reputation of the sector is as strong as the weakest link in the chain, and there remain too many weak links in the chain, which I hope that my noble friend and his colleagues will be able to tackle.

My noble friend has to keep fingering the trigger marked 64C. We have to see his knuckle tightening around the trigger to make the sector understand that this is really important because the distressing tendency to think it will all go away remains. Last week, one charity said to me, “We don’t need to worry about it because we’re good. We’re a charity and the Government don’t want to pull the trigger anyway”. My noble friend must be ready to pull that trigger and make it clear that he will do it. I want to see his trigger finger whitening over the next few months.

[Lord Bridges of Headley]

My Lords, I am extremely grateful for those incredibly kind words. The Bill has been through a long journey of consultation, pre-legislative scrutiny and parliamentary scrutiny and has emerged all the better for it. I thank a number of noble Lords for all they have done, not just in this parliamentary Session but well before it to make the Bill such a success. The Bill has seen this House at its very best. Where we have differed, we have managed to iron out our differences on the Floor of the House and off it. We have made concessions in the light of very good points that were made by a number of noble Lords. The Bill is all the stronger for it.

I will keep my remarks very brief, but I associate myself with a lot of what my noble friend Lord Hodgson said. I thank him in particular for what he has done to make the Bill what it is today. We can get into lots of clichés about having last orders in the last chance saloon with my finger on the trigger. I think we all agree that the charitable sector must heed the measures now before it. It must act and show that it is acting in short order. We will all be keeping our eye on what it does.

On that point, I thank my noble friend Lord Grade for his update. We are right behind him as well as alongside him. I urge him to make all the use he can of the expertise and good will on all sides of this House as he ventures out on his enterprise. There is a lot of wisdom to be drawn from this House and a lot of good will to make sure that his regulatory flourish produces the results we all want.

Before I finish, I will say a couple of words of thanks. I thank the Whip, my noble friend Lord Younger of Leckie, the noble Baronesses, Lady Hayter and Lady Barker, and the noble Lord, Lord Watson of Invergowrie, all of whom have helped me on this, my first Bill. I repeat my thanks to the noble and learned Lord, Lord Hope of Craighead, and my noble friend Lord Hodgson of Astley Abbotts. I thank again my noble friend Lord Leigh of Hurley, the noble Baroness, Lady Pitkeathley, and the noble Lord, Lord Wallace of Saltaire, who helped me a lot during the summer, enabling us to make fast progress on the fundraising front. I thank the Cabinet Office and Charity Commission officials in the Bill team for their work in supporting the passage of the Bill.

We will soon hand over the Act to be implemented by the Charity Commission. I know that noble Lords will be watching closely to ensure that the powers in the Act are used fairly and proportionately. I am sure that they will be, and I look forward to a positive report when the Act comes to be reviewed in three years’ time. Charities’ life-blood is public trust and confidence, which have been undermined by several regulatory failures. The Bill will do much to support the effective protection and regulation of charities and will help restore the public trust and confidence on which charities rely.

Motion agreed.