Charities (Protection and Social Investment) Bill [HL]

Debate between Lord Bridges of Headley and Lord Hope of Craighead

Monday 20th July 2015 Lords Chamber

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

My Lords, before I address this amendment, I thank all those who have debated, scrutinised and kicked the tyres, so to speak, of this Bill, not just in Committee but also during its pre-legislative scrutiny. Although I know there may be points on which some of us may differ, the Bill before your Lordships today has greatly benefited from the wisdom, experience and insight that a number of your Lordships, sitting on all Benches, have brought to the debate. The fact that we have managed to agree on so much reflects the overwhelming wish of this House to ensure that charities continue to have the trust and confidence of the general public.

This group of amendments is focused on providing greater clarity in the Bill, and more modern language. The noble and learned Lord, Lord Hope of Craighead, who has been involved in this Bill since its publication in draft last year, raised these points in Committee.

These amendments address the old-fashioned language of “privy to”, replacing it with a much clearer form of words while maintaining the threshold for intervention at the same level. Being “privy to” something can comprise more than mere knowledge, and includes an element of concurrence, or agreement, as well. We believe that the new formulation captures that.

There are two elements to the new wording: first, that the person,

“knew of the misconduct or mismanagement”;

and, secondly, that they,

“failed to take any reasonable step to oppose it”.

We believe that, together, both elements equate as closely as possible to “privy to” but are much clearer for the lay reader of the legislation. The amendments replace “privy to” throughout the Bill and the Charities Act 2011, except in one place in the Charities Act 2011, in Section 71. Here the context is quite different and privity does not appear to refer to anything more than just knowledge.

I apologise for the late tabling of Amendments 13A, 13B and 13C. I confess that there was an oversight on our part but we decided to table them late because without them we would have left “privy to” in one part of the Bill while addressing it in all others.

These amendments, while relatively minor changes, will improve the clarity of the Bill and make the law more understandable for the lay reader. I beg to move.

[Lord Hope of Craighead (CB)]

I am very grateful to the Minister and those who have been advising him for this group of amendments. As the Minister pointed out, it achieves much greater clarity than the rather old-fashioned word “privy”—being used as an adjective—did. It has been replaced by two very important verbs. The value of the clarity is that there are two sides to each of these clauses that one has to consider: the person who is being suspected of having engaged in the prohibited activity; and the commission itself, which has to police the activities of the person. Clarity is needed on both sides and the way in which the clauses have been reworded achieves that.

I congratulate the Minister on finding a better form of words than I think I was able to do—or indeed the Joint Committee was able to do when it was looking at the matter. The formula is much improved. I think I must bear some responsibility for not having searched through the whole Bill and traced all the various places in which “privy” was being used. I think we have now reached finality on that issue and for that, too, I am extremely grateful.

--- Later in debate ---

[Lord Bridges of Headley]

My Lords, this second group of amendments also responds to a point raised by the noble and learned Lord, Lord Hope of Craighead, and I am grateful to him for bringing this to our attention as well.

Amendments 5 and 6 relate to Clause 8, which amends the Charity Commission’s power in Section 85 of the Charities Act 2011 to direct the application of charity property where the person holding it is unwilling to apply the property. The purpose of Clause 8 is to enable the commission to make an effective direction in cases where the person holding the charity property may be willing but is unable to apply it. The most common example of this problem was considered to be where financial institutions hold a charity’s property but are unable to comply with a commission direction to transfer that property because to do so would result in a breach of their contract with the charity.

I am conscious that we have gone back and forth on this issue. Our initial drafting sought to remove any obstacles by allowing the commission’s direction to overcome a contractual obligation owed to the charity. Importantly, Clause 8 continues to provide the specific statutory protection for a financial institution in cases where compliance with a Charity Commission direction in these circumstances might constitute a breach of its contract with a charity.

However, we have been made aware that there are other barriers that may make a person unable to comply with a commission direction of this type; for example, a person may be willing in principle to apply a property properly but lack the power to do so. Therefore, our new formulation in Amendment 6 clearly amends Clause 8 to reintroduce “unable” so that it is clear that the commission’s power to direct the application of charity property can be exercised where the person holding the property is either unwilling or unable to transfer it.

Again, this is a relatively modest amendment but it will, I believe, improve the effectiveness and practicality of this provision. I beg to move.

[Lord Hope of Craighead]

My Lords, here again I express my gratitude to the Minister for bringing this amendment forward. He has explained very precisely the value which can be seen in the introduction of the additional word. I know from communications with the Charity Commission that it is delighted that this amendment is being made. As I endeavoured to explain in Committee, the wording in the Bill when it was introduced left it with a problem, which has now been solved. On behalf of the commission, I am extremely grateful.

Charities (Protection and Social Investment) Bill [HL]

Debate between Lord Bridges of Headley and Lord Hope of Craighead

Monday 29th June 2015 Grand Committee

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

My Lords, I, too, will keep my remarks relatively brief, by reason of the conclusion that I have come to as a result of what the noble and learned Lord and the noble Lord have said.

The provision corresponding to Clause 8 in the Bill made reference to “unable” in the manner proposed by this amendment. The Charity Commission asked for the change following several cases where financial institutions holding charity property were contractually unable to transfer it to secure its proper charitable application but would have been willing to do so. As the noble and learned Lord said, the Joint Committee which considered the draft Bill supported the provision.

However, as is noted in the report, the Charity Law Association, while it did not oppose the change, questioned whether the meaning of the word “unable” was sufficiently clear and whether banks in such situations were really unable to transfer charity property, or simply unable to breach a contract to do so. Therefore the Joint Committee recommended that the Government consider the inclusion of some form of statutory protection for a financial institution in cases where compliance with a Charity Commission direction in these circumstances might constitute a breach of its contract with a charity. The Government therefore followed this recommendation and amended Clause 8 to provide for such statutory protection. Since the clause was aimed at dealing with financial institutions which are contractually unable to transfer property, this statutory protection was considered sufficient and the reference to “unable” was omitted.

The amendment tabled by the noble and learned Lord, Lord Hope, proposes to reinstate the reference to “unable”, as we have heard, and further examples have been provided as to when this would be needed beyond the contractual liabilities of banks. I also note what the noble and learned Lord said about his conversations with the Charity Commission. In light of this, I am happy to give further consideration to the amendment and to return to this on Report.

[Lord Hope of Craighead]

My Lords, I am grateful to the noble Lord for his remarks. It is worth adding that the wording of Clause 85(1) is quite general—it refers to,

“a person or persons in possession or control of any property”.

It does not confine the provision to banks alone. Although they may be the main aim of the provision, it is more widely cast, so whatever the banks may think is not the end of the story.

I hope that the noble Lord will bring forward something on Report without my finding it necessary to table another amendment to keep the matter alive. For the time being, however, in light of what the Minister has said, which I very much welcome, I beg leave to withdraw the amendment.

Charities (Protection and Social Investment) Bill [HL]

Debate between Lord Bridges of Headley and Lord Hope of Craighead

Tuesday 23rd June 2015 Grand Committee

[Lord Hope of Craighead]

My Lords, I will resume what I was attempting to say. Before we broke for the vote, I drew attention to the width of the expression “a sexual offence”, which is a cause of some concern. There are a number of points to be made as far as the sex offendering register is concerned. First, it applies to people who have been sentenced to 30 months or more of imprisonment or detention. Secondly, subject to an order that came into force in 2012 and gives a certain power to the chief officer of police, the entry on the register is indefinite, without limit of time.

The case that I was about to mention came before the Supreme Court in 2010 and led eventually to the making of the Sexual Offences Act 2003 (Remedial) Order 2012. It was a case where a child aged 11 was convicted of an offence. It caused real grounds for concern in that the crime he committed meant that he would have had a permanent position on the register. One has to wonder whether somebody who committed an offence of that kind when a teenager and who reached the age of 60, let us say, should really be subject to the automatic disqualification which would flow from this amendment if it were to stand as it is.

I appreciate that the chief officer of police has the power to remove people from the register but I do not know how often that power has actually been exercised. It may be that the Minister can find out from other sources as to the efficacy of the order, but it is a ground for concern that placing on the register has such a powerful effect on the individual. We heard evidence from a body called Unlock. It made the point that there are some people for whom rehabilitation is so important. Contributing to public life by participating in charities, years after an event which happened at a much earlier stage in their life, is something that they would greatly value. There are real grounds for concern about the width of the amendment and its suitability, and whether it really falls into the nature of offences that would justify automatic disqualification.

I raise these issues as a note of caution. I would not go to the point of voting against the amendment if it were pressed to a vote—which, of course, it cannot be in Grand Committee—but these points suggest that the question requires careful consideration before the noble Lord would accept the amendment.

[Lord Bridges of Headley]

My Lords, let me start by echoing what my noble friend Lord Hodgson of Astley Abbotts said. We all agree that we must do all we can to ensure that the vulnerable—be they young or old or, as the noble Baroness, Lady Barker, said, those with dementia—are protected within charities. The question we are grappling with is how best to do so.

The Charity Commission takes safeguarding issues very seriously. Its statement of regulatory approach makes it clear that the abuse of vulnerable beneficiaries is a matter to which the commission will pay particular attention, alongside terrorist abuse of charities and fraud. The Charity Commission’s director of investigations, monitoring and enforcement has said:

“The public relies on trustees to have robust procedures in place so that people working in a charity with access to beneficiaries are suitable to hold those roles”.

Trustees must,

“ensure their charity has appropriate and robust policies and procedures in place to safeguard the charity’s beneficiaries, including a process for recording incidents, concerns and referrals”.

The Charity Commission publishes detailed guidance for charities on their safeguarding responsibilities. It explains the legal requirements for charities working with children and vulnerable groups and how they must safeguard them from harm. It covers what safeguarding involves, what child protection policies and processes should include, and explains the Charity Commission’s role in ensuring that charities follow the law.

The Protection of Freedoms Act 2012 established, as your Lordships know, the Disclosure and Barring Service or DBS, which processes criminal records checks and manages the lists of unsuitable people who should not work in regulated activities with children or adults. The DBS decides who is unsuitable to work or volunteer with vulnerable groups. There are two points to stress: it is an offence first, for a barred person to apply for such work, paid or voluntary; and secondly, it is an offence for a charity to employ a barred person in such work. Furthermore, Sections 35 and 36 of the Safeguarding Vulnerable Groups Act 2006 imposed a duty on regulated activity providers and personnel suppliers to provide the DPS with information where there is a risk of harm to a child or vulnerable adult. There is an established policy of reporting abuse directly to the DBS.

Charities (Protection and Social Investment) Bill [HL]

Debate between Lord Bridges of Headley and Lord Hope of Craighead

Wednesday 10th June 2015 Lords Chamber

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

My Lords, I thank all those who have spoken for their excellent contributions and for the kind words spoken about me. Clearly, the pressure is now on for me to live up to your Lordships’ expectations. I particularly thank the noble Lord, Lord Watson of Invergowrie, for his speech and for his contribution to the pre-legislative scrutiny of the Bill. The last few hours confirmed what I said at the start of the debate: your Lordships’ House is indeed a place for quiet but incisive scrutiny. Much more than that, it is a forum in which the voice of our nation’s “little platoons” can be heard. I counted more than 30 charitable organisations being represented by the speakers in this debate.

Taking a step back, it is clear to me that, thanks in very large part to those who spent so long scrutinising these proposals over many months, there is considerable support in this House for the principles that underpin the Bill and most of its measures. Let us not forget why these powers are needed. It was the independent National Audit Office that pointed to,

“gaps in the Commission’s statutory powers which were hampering its ability to regulate effectively”.

In the years since that report was written, many in the charity sector have supported the need for change, as my noble friend Lord Hodgson did again today. These powers need to be carefully balanced, as does the role of the Charity Commission, between being a regulator and an adviser, as the noble and learned Lord, Lord Hope of Craighead, said. Here again I pay tribute to and thank the noble and learned Lord—the Usain Bolt of charity law, as we are told to call him—for all he did in making that process so productive and worth while.

[Lord Hope of Craighead]

My Lords, it occurs to me that Usain Bolt suggests that we rather rushed our job. I think Mo Farah might be a better analogy.

[Lord Bridges of Headley]

I am brought up short. The noble and learned Lord is quite right: Mo Farah would be much better. Thanks to the noble and learned Lord’s hard work, and the work of so many others in this Chamber, I am pleased but not entirely surprised that rather than wheeling out the wrecking ball for this Bill, your Lordships have simply started to stick little pins into it before the House, to test, to probe and to clarify a little bit more. I very much welcome this, my first experience of legislative acupuncture, an experience I am told will leave me feeling invigorated, refreshed and revitalised.

Turning to address the points made, I hope to cover as many as I can, starting with some of the more detailed comments. The noble and learned Lord, Lord Hope, asked whether we could amend Clause 8 to make it clear that there are other circumstances in which a third party may be unable to comply with the Charity Commission direction. I am sympathetic to this point as we want the provisions to work effectively. We will need to look at this in some more detail before Committee, as we will other words such as “privy”, which I think the noble and learned Lord also mentioned.

My noble friend Lord Lindsay referred to the complementary role that standards and accreditation could play alongside the new powers proposed in the Bill in addressing governance and trustee issues. I agree and I welcome the work being done by the United Kingdom Accreditation Service and the NCVO to explore the potential that standards and accreditation have to offer in the charity sector.

My noble friend Lord Hodgson made a number of incisive points, as one would expect. He asked for the tribunal appeal rights to be consolidated and simplified. While recognising his point, it is important to note that not all Charity Commission decisions are subject to appeal and the existing table of appeal rights provides a useful checklist of what decisions can be appealed and who can appeal them. The Charity Tribunal itself has, I am told, not expressed concerns about it in practice. My noble friend Lord Hodgson also asked for time to implement the Law Commission’s recommendations. I am sorry to say that I cannot give any guarantees, but my noble friend knows that the Government will look favourably on deregulatory and simplification measures.

A number of comments were made about the social investment aspects of the Bill, and I am very encouraged and heartened by the interest that your Lordships paid to this. The noble Viscount, Lord Chandos, for example, made a number of perceptive points about social investment, as did the noble Baroness, Lady Kramer. I would very much like to meet with both of them to pick their brains, as they clearly have a lot of experience in this sector. I know that the noble Viscount sits on a number of foundations, and it is quite clear from the noble Baroness’s very eloquent speech that she, too, has a lot to offer.

My noble friend Lord Borwick made some very interesting points on the definition of social investment, including a slightly detailed point on mixed-motive investment. I will not detain the House on that point now but I would be delighted to discuss it with him, as I would with my noble friend Lord Bridgeman. As regards the naming of charities, a point which my noble friend Lord Borwick brought up, I simply point out that it is an offence to call yourself a charity if you are not; and as regards charitable income, charities must now declare income from central and local government in their accounts.

I turn to my noble friend Lord Moynihan’s remarks about independent schools, and pay tribute to the extensive and fantastic work that he has done in this area and on sports in general. He made some interesting points about the public benefit test. I would like to make it clear that charities already have to report on their public benefit in their trustees’ annual report. However, I would be happy to meet my noble friend before Committee to discuss the points that he has raised. Likewise, I would like to discuss the public benefit issue with the noble Baroness, Lady Brinton, who also brought this up in a number of ways.

Perhaps I may turn to some of the substantive points in the Bill itself. Clause 3, as noble Lords will remember, will enable the Charity Commission to take account of other relevant evidence of a person’s conduct in the context of a statutory inquiry into a charity. I think that the noble Baroness, Lady Barker, and the noble Lord, Lord Low, raised concerns about this. I would simply point to several safeguards on this point, and I shall do so quickly. First, there must be a statutory inquiry open and the Charity Commission must be satisfied that there is misconduct or mismanagement linked to the individual in that charity before it can rely on conduct from outside the charity in its decision-making. Secondly, when exercising its powers the commission must provide a statement of reasons which sets out the evidence it relied on in making the decision. This would include any evidence it relied on from outside the charity. Finally, there is a right of appeal to the Charity Tribunal in relation to the exercise of the commission’s compliance and remedial powers, ensuring judicial oversight of the exercise of the power.

The noble Baroness, Lady Barker, and the noble Lord, Lord Low, also referred to Clause 7, which contains a power to direct a charity to be wound up. As your Lordships will know, the commission’s usual practice is to restore a charity to health following an inquiry. However, in some very rare cases—and I stress they are rare—it would be more appropriate for any remaining assets to be transferred to another charity. The commission can already do that under existing powers, but now the commission will have the power needed for the shell to be wound up. This power is available only in the context of a statutory inquiry where there is misconduct or mismanagement, or risk to charity property. In addition, the commission must be satisfied that the charity does not operate, or that its purpose could be more effectively promoted if it were to cease to operate, and that the exercise of this power is expedient in the public interest. There is also a requirement for the commission to publish details of a proposed winding-up order and invite representations. A winding-up order can be appealed to the tribunal. So, there are a number of safeguards around that clause too.

Two points were made on Clause 9, which concerns the automatic disqualification powers that the Charity Commission is to be given. The noble Baronesses, Lady Hayter and Lady Barker, and the noble Lord, Lord Low, among others, raised this point. I am sure that we will discuss this further in Committee. As regards their wish for sex offences to be added to the list, I would simply say that there is an existing regime to ensure the suitability of anyone in a charity with unsupervised access to children and vulnerable adults. Whether they are a trustee, an employee or anyone else, they must all have had a Disclosure and Barring Service check. It would be impractical for the Bill to break down the charities type by type and prescriptively list criteria for automatic disqualification in each case. Charities should be trusted to make their own decisions on how suitable a potential trustee is when recruiting. Where charities fail to take their safeguarding responsibilities seriously, the Charity Commission can and does intervene to take regulatory action.