Charities (Protection and Social Investment) Bill [HL]

Lord Hodgson of Astley Abbotts Excerpts

Wednesday 10th June 2015 Lords Chamber

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, we descend from the rarefied atmosphere of world diplomacy to the rather more pragmatic matter of the Charities (Protection and Social Investment) Bill. I admit that my fingerprints are on a good many parts of this Bill and I therefore begin by pleading guilty as charged. It will come as no surprise to my noble friend on the Front Bench, or indeed the House as a whole, that I am very supportive of the principles behind this legislation.

My noble friend was kind enough to say some nice things about my review in his opening remarks. I reciprocate by congratulating him on his maiden speech. Maiden speeches are, for all of us, a moment of terror. If it is a maiden speech from the Front Bench the hurdle is commensurately higher. I have to say that he cleared the hurdle with aplomb and I congratulate him on that. Of course, he need not think that I will not probe him in Committee. I am a Back-Bencher and I will do my scrutinising work. However, as to the direction of travel, I have no doubt that the Government are on the right track.

My nearly year-long review of the Charities Act, from which a good many of these proposals flow, was fascinating but also humbling because one saw around the country groups of men and women, often with not much money or resources but with commitment, drive and enthusiasm, setting out to tackle some of the most difficult and deep-seated problems of our society, and doing so without expecting any reward or publicity, or to be noticed or praised. They are in many cases totally unsung heroes.

When I began the review, I asked the charitable and voluntary sector to bring forward its ideas for change. It did so with a will—so much so that I ended up with 115 recommendations, only a minority of which required statutory effect, some of which we are considering today, while others required action by the Charity Commission and the sector or, indeed, by the professions or other parts of our society. However, the House can imagine that the volume of paper and submissions behind those ideas was very substantial. It all had to be read through, absorbed and integrated into the report.

This debate gives me the chance once again to put on record my thanks to the Cabinet Office team who supported and looked after me and prevented me going too far off-piste, at least one of whom is in the officials’ Box to the left of my shoulder. It also gives me the chance to inquire about the fate of some of the other more technical proposals. These have been taken up by the Law Commission, which currently has a consultation out—a paper rather forbiddingly entitled Technical Issues in Charity Law. It is 279 pages long and will, I fear, never hit the bestseller list, nor can it be described as a ripping yarn. However, the Law Commission, with its normal forensic attention to legal detail, has laid out the pros and cons in the consultation paper. The consultation closes on 3 July. Today all I really seek from my noble friend is an assurance that, when the results of the consultation are absorbed, the Government will find time quickly to bring forward another Bill on charities—this time using the Law Commission procedure for non-controversial measures. I comfortably predict that the contents of that Bill will not have people dancing in the saloon bar of the Dog and Duck. However, there is an opportunity to greatly facilitate and bring up to date charity administration and procedures in a number of areas such as land transactions, permanent endowment, charity mergers and the operation of the Charity Tribunal. Therefore, I hope that at some point during the proceedings on the Bill, my noble friend will reassure me that the Government will give any such Bill proper priority.

I said in my earlier remarks that the report contained 115 recommendations and I was rather gratified that it was well received by the sector. However, in life, particularly in political life, if you have a moment of self-satisfaction, you can be quite certain that someone is going to smack you on the nose straightaway. My smack on the nose was given to me by a lady who, on being introduced to me, having just got involved in charities, said rather peremptorily, “Do you know anything about charities?”. I replied, “A little”, I hope in a duly modest tone. She said, “I have just joined the board of my hospice”. I said, “Splendid. How is it all going?”. She replied, “It’s going wonderfully except for one thing”. I said, “What is that?”, to which she replied, “Some idiot has produced a report with 115 recommendations that we are going to have to absorb”, so I went on my way duly chastened.

I turn to the Bill itself. My work on the review revealed the stupendous breadth of the Charity Commission’s work. The briefings state that there are more than 160,000 registered charities. However, as the noble Baroness, Lady Barker, pointed out, there are probably as many again which are unregistered, exempt or excepted. So, there are probably a third of a million charities, with more than 1 million trustees, the regulation of all of which ultimately ends up with the Charity Commission. To put it in context, if you take just the 160,000 registered charities and assume that they send their accounts in to the Charity Commission on a 250-day working year, that is 650 sets of accounts the Charity Commission would have to get every day. As everyone has pointed out, malfeasance is gratifyingly rare but, with the numbers of charities and trustees, there are bound to be occasions when people behave less well than we might like. If public trust and confidence in the sector are to be maintained, it is vital that the commission has the necessary powers.

My non-political life has been spent in industry, commerce and the City. The regulators of those sectors have draconian powers. By comparison, I found that the Charity Commission was rather underpowered. Two simple examples have come up today. The fact that when you hear the heavy tread of the Charity Commission coming towards you, you can resign and get away without any censure at all seems extraordinary. The fact that, if I have behaved badly, the Charity Commission will remove me as the trustee of a charity but cannot prevent me from reappearing five minutes later as the trustee of another charity also seems unacceptable. Of course, the powers need to be used proportionately and we will no doubt discuss those checks and balances in Committee but public trust and confidence will be eroded if bad apples repeatedly turn up as trustees, directors or senior managers in the charity sector.

I will add a word on the inclusion of the terrorist funding offence, which, if the Bill is implemented, will lead to automatic banning as a trustee. I began my review thinking that this was an open-and-shut case which one could have no problem with. But I found—as those of us who served under the able chairmanship of the noble and learned Lord, Lord Hope of Craighead, on the pre-legislative scrutiny committee subsequently found—that it was more complex than it at first appeared. Charities that provide aid to dysfunctional and broken areas of the world—and I believe they should, for moral reasons and because it is part of our soft power and reputation building around the world—may have to make compromises.

What do I mean by compromises? I will give the House a brief example. I am sent these things quite a lot. The example concerns Iraq and Syria—both areas much in our minds when it comes to the funding of terrorism—and a very unfortunate people called the Yazidis. The Yazidis live—actually, lived—mostly in the Nineveh province of Iraq and they belong to a very ancient religion that I think is linked to Zoroastrianism. ISIL considers them to be devil worshippers and believes the state should be purified and purged of them. The House will appreciate what “purified and purged” means if you are an ISIL freedom fighter. For Yazidi men it often means brutality followed by death, and for Yazidi women it means sexual slavery and repeated rape by ISIL freedom fighters. Yet hope exists. There is a market for these luckless women. For about $10,000 the freedom of one Yazidi woman can be purchased. The legal and moral dilemma for a British charity seeking to buy the freedom of one of these unfortunate women—and who can blame it or criticise it for wishing to do that?—is that the $10,000 is almost certainly going to go straight to ISIL.

As the noble and learned Lord, Lord Hope of Craighead, pointed out, too inflexible an application of the terrorist provision will have a chilling effect on the provision of charitable aid of the sort that I have just described. We need at some point, either here or in other bits of Bills—and I take the stricture of the noble and learned Lord about this—some form of “safe harbour” provision so that charities that are doing responsible work in these ghastly areas of the world can do so without feeling that they are opening themselves up to criticism and legal threat.

I turn to the Bill’s provisions on social investment, which was another chapter in my review. This is a new development and one in which the United Kingdom is a world leader. I hope that it can remain so, as it has fantastic possibilities to be achieved by combining charitable purposes with the opportunity to earn a modest financial return. Not only could it greatly increase the volume of charitable investment and spread the number of investors; it also opens the way for new approaches and ideas in the operation of individual charities. But—and I am afraid that it is a significant but—it is a very new movement and we need to be careful not to place on it a weight of expectation which it cannot sustain, so there is a need for incremental reform to the statutory framework as the social investment movement develops.

Research that I carried out for the review revealed that the provisions of the Trustee Act 2000 are a significant impediment to established charities becoming involved in social investment. This is because, first, it emphasises that the primary duty of a trustee is to preserve capital and, secondly, it makes no distinction between a charitable trust and a private trust. They have very different objectives. For a private trust such as a person’s pension fund, the preservation of capital is of course critical, otherwise the pension cannot be paid. However, for a charity it is a different matter because it has a public benefit requirement, so it could be perfectly proper for a charity concerned with, say, prisoner rehabilitation to spend some of its capital on those objectives—not to do so capriciously or without due care and attention, because in those circumstances the trustees would certainly be liable, but soberly, carefully and after due inquiry. I am sure that the noble and learned Lord will know better than I do that some lawyers argue that a distinction already exists in law, but the evidence I got suggested that there was a chilling effect. So I am glad that the Government are now proposing to put beyond doubt that the position of a charity trustee is different from that of a private trustee.

I referred a moment ago to the need for a gradualist approach in assisting the development of social investment. It is of course not just the Government who have to play a part; so do the regulators, the FCA and the Charity Commission, as well as myriad professional bodies including accountants, advisers, investment managers and financial advisers. At some point in proceedings on the Bill, it would be helpful if my noble friend could tell the House or the Committee what actions the Government are taking to chivvy up this group in their support of social investment, and what the present position is on those developments.

Finally, I turn to something which is not in the Bill as drafted. One of the issues which I expect we will explore in Committee is whether the commission’s new powers are proportionate or represent an inequality of arms, especially as regards smaller charities. When the Labour Government brought in what became the Charities Act 2006, they introduced the concept of the Charity Tribunal. This was to be a user-friendly, non-adversarial, quick and cheap means for charities—again, especially smaller charities—to get access to redress when they believed that they had been unfairly treated by the commission. Prior to this, the only method of redress was an appeal by the charity to the High Court. As we all know, Silks, like supermodels, do not get out of bed for less than a few thousand pounds a day. The result was that charities mostly had no option but to submit automatically to the commission’s direction.

It is fair to say that the tribunal got off to a bit of a slow start and that early hopes were not entirely fulfilled, but progress towards the original idea is now being made. One inhibition is contained in Schedule 6 to the consolidated Charities Act 2011. This is a complex, 10-page schedule as to who may do what, how they may do it, what the timescales are and what the outcomes or redress may be. To the trustee of the smaller charity, it is a formidable bureaucratic list. If your Lordships look at line 22 on page 6 of the Bill, you will get a flavour as there is an amendment to that schedule. I argued in my review that this represented an inequality of arms and an unnecessary impediment to access to justice for charities. I recommended that the whole schedule should be replaced by two simple provisions: first, that any charity should have a right of appeal to the tribunal against any legal decision of the Charity Commission; and, secondly, that it should have the right of review against any other decision by the commission. In so far as the House may wish to explore proportionality in the commission’s new punitive powers, a reform to remove the existing Schedule 6 and have that simple replacement would represent a rebalancing. I hope that the Government will reflect on the advantages of such an approach between now and Committee.

Today, I conclude by saying that the principles of the Bill are doing the right things in the right way. The Bill has my support.

Voluntary and Charitable Sectors

Lord Hodgson of Astley Abbotts Excerpts

Thursday 26th June 2014 Lords Chamber

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I begin by adding my thanks to my noble friend for having given us the chance to debate this important topic. Some noble Lords will be aware that I was the official reviewer of the Charities Act 2006, which gave me the chance to see at first hand the fantastic work being done by the sector. I have no doubt about its value to our society.

I should like to underline two points that my noble friend made in her opening remarks. The first was on the dangers of the indiscriminate referral by jobcentres of individuals to charities. The reality is that too often it seems that the jobcentres are trying to fill a quota, with jobs being offered, and not thinking about what the charities need, important though charities can be in finding a way back to paid work. The second point she made was about tendering and contracting. I think she underestimated the risk-aversion among commissioners. Too often they are prepared to go to the large firms and not think about the more innovative small firms.

I want to focus my remarks on social investment. Noble Lords will be aware of the concept of social investment, whereby foundations and/or individuals do not give their money outright to a charitable endeavour but lend it or invest it, and they hope to get their capital back, maybe with a modest return. It has a very wide range of applications and obviously it is particularly relevant when considering proposals that contain an element of payment by results.

Social investment could be a game-changer in many ways; first, by encouraging big charities to use some of their investment assets. There is £126 billion-worth of investment assets among registered charities so a very small percentage of that diverted to this endeavour would be extraordinarily helpful. Secondly, and equally importantly, it gives wealthy individuals a chance to put something back, and we could easily see people who have an interest in a charity giving it not only money but effort, time and commitment and thereby improving its performance and work.

I hope the House will understand why I was very attracted to the possibility of developing the concept of social investment and why my report contained a number of recommendations as to how we might achieve it. Nevertheless, we have to recognise that the concept is in its early days so we need to be careful not to create too high expectations of what may be achieved. Importantly, the next stage is to facilitate social investment, not impose it.

However, facilitation will require a shift of approach by a number of bodies for which risk-aversion is the default option. These bodies include the accountancy profession, the actuarial profession, investment managers, charity advisers and the regulator, the Financial Conduct Authority. It will also require an entirely different approach from HMRC, which today has refused to give a clearance in advance to social investment schemes. That means that a charity has to go through the whole procedure of creating and setting up the scheme before it knows whether or not it will get the charitable breaks it requires. My noble friend on the Front Bench could act as Dyno-Rod in trying to deal with this problem, if only to follow the example of the Internal Revenue Service in the States, which offers blueprints where charitable permissions have been given so there are examples that charities can follow when they start to create their schemes.

All this will depend on us creating the right overarching legal framework. My report made a number of suggestions as to how this could be achieved. I am extremely grateful to the Government for having accepted most of them and having passed them to the Law Commission for consideration. I am equally grateful to the Law Commission for having written an exceptionally clear and concise consultation paper on social investment. The consultation period closed last week, on 18 June.

So far, so good—but there is one fundamental problem that, if not addressed now, could undermine all this good work, and that is the knotty legal definition that lies at the intersection of public and private benefit. Noble Lords will have seen in the briefing papers from the Library that charities must always act for the benefit of the public. So how does the concept of social investment fit into this, since it offers a financial return to lenders or investors, albeit at a modest level?

The law currently gets round this by permitting a level of private benefit where this is “necessary and incidental”. However, in my review I came to the conclusion that the word “incidental” did not offer sufficient protection for social investment proposals and recommended that it should be replaced by “proportionate”. I regret to say that the Government rejected this proposal. I quite understand the dangers of changing long-hallowed legal terminology and the potential unintended consequences that may follow. But if my noble friend on the Front Bench asks his officials to pass him a copy of the Shorter Oxford English Dictionary, he will find that the definition of incidental is:

“Occurring as something casual or of secondary importance; not directly relevant to”.

I do not see how this possibly fits with social investment returns. They are certainly not casual, nor to the investor or lender are they necessarily of secondary importance, and they are certainly directly relevant to. By contrast, proportionate is defined as:

“That is in (due) proportion (to); appropriate”.

As part of its consultation on social investment, I draw the Law Commission’s attention to this problem, but I fear that it will conclude that it is outside its terms of reference. I am, therefore, asking my noble friend to commit to taking this issue away and giving it a thorough re-examination.

To conclude, I have explained that the social investment movement has the capacity radically to improve funding flows to charities. It would be a tragedy—and I mean a tragedy—if it were to be stillborn because of an unduly narrow legal interpretation of the word “incidental”. I am not alone in this: I am supported by Bates Wells Braithwaite. My noble friend Lord Phillips, who was a senior partner, has given me permission to quote from its report to the Law Commission. It states:

“We believe that re-modelling the private benefit test solely in the case of social investment so that the private benefits can be reasonable and proportionate will be essential for English and Welsh charities to engage in this type of catalytic investments ... we are strongly of the view that a reform as proposed by Lord Hodgson would make a radical difference to the likelihood of the social investment market developing positively in the UK”.

I hope that my noble friend can help.

--- Later in debate ---

[Lord Wallace of Saltaire (LD)]

My Lords, as I expected, this has been an excellent debate. As I came here I thought that it would be very difficult to respond to comments from noble Lords, many of whom know a huge amount more about this sector than I do. I have learnt a huge amount from the noble Lord, Lord Hodgson, in particular. I remembering him taking me through the evolution of regulation and charities law from 1601 onwards. I hope that he noted the recent remark made by an eminent lawyer, that charities law had been asinine since 1601. As we all know, charities law has evolved to cope with charities changing their view of what they should do, which remains a contested issue. I speak on behalf of the Government when I say how grateful we are for the work that the noble Lord, Lord Hodgson, has done, both in his statutory review of the Charities Act 2006 and in his contribution to the Civil Society Red Tape Taskforce. The Government hope that he will continue to play an extremely valuable role in that area.

When I went to east London to look at the work which a local Baptist minister, Mr Mawson—the noble Lord, Lord Mawson—had done, I also learnt a huge amount about local initiatives and local activity. When I first learnt about community foundations I went to Calderdale with the noble Lord, Lord Shutt, and was enormously enthused by the work which the community foundation there is doing and the way in which it is able to galvanise local philanthropy. I repeat what I said the previous time we debated this issue. Oversight of the voluntary sector is the sort of role which the House of Lords in its current composition plays very well. We ought to have regular debates on aspects of that area, because it is one on which the Commons does not focus very well. As the voluntary sector begins to deal with different challenges, we should look at how well it copes.

I start with some very broad issues about the importance of this area. We are now reaching a point where there is a degree of consensus across all the political parties in this country about the importance of striking the right balance between an open society, a free but regulated market, and a strong but limited state. We can all argue—and that is the place for democratic politics—about exactly how that balance should be struck: how large the state should be, how large a proportion of the economy it should control, and how large a proportion of national income it should take. Those are all difficult issues that we must grasp, but we all now understand that the state cannot do everything, that the welfare state cannot provide everything, and that a state that is too strong impoverishes its citizens. In an open society, we need active citizens who are not too dependent on the state.

I have done most of my politics in Huddersfield, Manchester and Bradford. I remember particularly, when I was a candidate for a central Manchester constituency, arguing with local authority officials who were quite sure that they knew what was good for the people of Hulme better than the people of Hulme did. The people of Hulme sat around and had things done to them, and played very little part in managing their own affairs. Many of us have spent time in those big inner-city estates, and know the problems that that has led to. Part of what the Government have been doing with community organisers and the National Citizen Service has been getting back into those communities the idea that people are better off if they do some things for themselves. We all now know from all sorts of psychological studies that people who feel they have some control over their own lives, and play some active part in their local community, are happier and more fulfilled in their lives.

The right reverend Prelate the Bishop of Derby talks about the end of the welfare state, but I simply do not recognise that concept. Indeed, in some ways the welfare state is expanding. Health reform in the United States is becoming embedded, and I suspect that that will not be reformed. The biggest democracy that has resisted that element of the welfare state is now embedding it. However, we recognise that the welfare state, if simply left, would expand to crowd out all other elements of public expenditure, and would then crowd out the private aspect of the economy as well.

To be maintained in its current state, the National Health Service needs an income that grows larger and larger each year. I am particularly conscious of that at the moment, having just had a new hip, and having discovered how many other people in my generation have also had a new hip. That makes me realise to what extent that sort of thing, as we all get older, is leading to the strains on the welfare state as publicly funded. I hope to make 97 at least, and the strain on the state from my state pension, my travel pass and various other things will also contribute to the problems of the welfare state.

Yes, we are all committed to the continuation of the welfare state, but we recognise that it has limits, that it is bad for us to be too dependent on the state, and that the voluntary sector alongside it has a great deal to contribute—including, of course, to the National Health Service. Just think about how much money is raised for medical research and other dimensions from the voluntary sector, and the excellent initiatives such as those that the Government have been supporting—the growth of dementia volunteers and King’s College Hospital volunteers to relieve the pressures on local hospitals. That is all part of what we must do to ensure that the welfare state continues to maintain its functions.

I follow the debates of such bodies as Policy Network and Policy Exchange, and I recognise that they are all discussing these questions. We cannot depend entirely on the state. Twenty years ago, when I was working for the University of Oxford, I was helping to raise funds for a range of international initiatives. Someone from a Dutch university said to me, “It’s actually very difficult to raise money for universities from the private sector in the Netherlands, because when you approach a possible donor he thinks, ‘If this were a good idea, the state would already have paid for it,’ so the fact that you are asking for a private donation makes people think that it’s not a very good idea.” But when we went to the Swiss, they understood. With a more limited attitude towards their state, they understood that it was a good idea to have both voluntary funding and state funding for higher education. One of the reasons why British universities are better than those in a number of other European countries is that they have both state and private funding.

We have heard a lot of comments on central state funding and local activity. I think that there is a consensus that we have become too centralised, in the UK as a whole but above all in England, and that decentralisation—both from Whitehall to local authorities and, as far as possible, from a relationship between large national charities and the state to one in which local authorities and other local bodies relate to local charities—is healthier. The noble Baroness, Lady Barker, talked about the relationship between big charities and central government. Having stronger local authorities dealing with local voluntary organisations is a desirable state of affairs. I pay tribute to the noble Baroness, Lady Eaton, who talked about the role of Near Neighbours within a number of local communities. There are many examples like that. Local giving, as the noble Lord, Lord Shutt, said, is easier to make a case for—local actions and local campaigns. In Saltaire we are just embarking on local horticulture, imitating Todmorden and others. That means growing local food in spare ground and making it available to people who do not have their own gardens. There are all sorts of local activities that we should be helping to support.

The noble Lord, Lord Kennedy, asked what had happened to the big society. My answer to him is that a great deal is happening. I regret that the Prime Minister uses it less than he did, but I am extremely happy that the Labour Party is now accepting many of the Government’s initiatives into its own campaigns. I was a sceptic about the National Citizen Service myself when it started. It was a Conservative scheme that I was not entirely convinced about—but I became a convert as soon as I visited my first National Citizen Service scheme. I am happy to see that the Labour Party now proposes that that service should be extended. That means that all parties now accept that it is a highly desirable development.

I was equally sceptical about the Conservative proposals for community organisers when they were first made. But now that I have seen community organisers working in Bradford and Leeds, I am persuaded that that is a way of helping to energise shared local action within local communities that all of us, from all parties and perspectives, should be happy to support. That is what is happening on the ground, and I hope that the noble Lord, Lord Kennedy, is as impressed with it as I have been.

We have talked about the problems of youth engagement, but there is quite a lot of encouraging evidence that young people are becoming more engaged in local volunteering. The National Citizen Service has certainly helped, and it appears that young people are keen to get engaged where they are given the opportunity to do so. I recognise that, as one or two noble Lords have said, community work placements can muddy the water, but part of the philosophy behind such placements is to give people some experience of working with others and for others, which in itself is a self-motivating experience.

There has also been much talk about elderly volunteers. We are all aware of that aspect. I have promised my wife that when I retire, in a few years’ time, I will go into voluntary service. I am very proud that when my mother finally stepped down from her last voluntary role, as chair of an old people’s home, she was herself older than a substantial number of the people living in the home. This is not an entirely new idea. The elderly fit are now very much part of those who hold voluntary action of different sorts together.

We have talked a lot about fundraising and funding, state contracting, and provision of public services. Of course, there is a problem with state funding of the voluntary sector, because public funds have to be publicly accountable. That carries with it a level of bureaucracy that does not exist in the same way with private donations. There must be accountability for public funding. The Government are, however, carrying through a number of useful experiments. There are social investment targets to fulfil, and so on, as well as social action proposals and Community First funding, which help to encourage the sector to innovate.

As I have come to terms with different elements in this sector, I worry about the parts of the voluntary sector that are over-dependent on public funding. If a voluntary organisation is dependent on the state for most of its funding, it ceases in some ways to be an entirely voluntary organisation. That seems to me a large issue for the future.

[Lord Hodgson of Astley Abbotts]

I am extremely grateful to my noble friend and shall be very brief. He said some very nice things about me and I am very grateful to him for that. I do not want to bite the hand that feeds me, but before he leaves the issue of social investment, will he give a commitment to look at the wording of “necessary and incidental” and “necessary and proportionate”? Without that change there is a real danger that this important movement may be stifled.

[Lord Wallace of Saltaire]

My Lords, I am happy to give that assurance and I will be in touch with the noble Lord later in terms of what precisely the answer is. We have asked the Law Commission to look at the content of social investment by charities within the confines of charities law, and I will come back to the noble Lord on that.

The noble Baroness, Lady Tyler, asked about the JustGiving report, to which I trust the Government will respond in good time. Payroll giving has developed a good deal. I am well aware from one or two members of my family who work in the City that payroll giving has spread across the City. It is a useful contribution from those who can afford to pay. We all also need to focus on philanthropy in our unequal society. That is the sort of thing that I hope archbishops and bishops will be saying loud and clear. When I think of those within the community I particularly recall the contribution that the Sainsbury family has made in all sorts of ways to medical research, the University of East Anglia, the National Portrait Gallery, et cetera, with the money it inherited. I regret that we have not seen from the City and the financial sector as much in the way of philanthropy from those who have been lucky and successful enough to give back to society what they have gained economically. I hope that we will hear from others on that theme.

A large number of other issues were raised. In terms of campaigning and advocacy, there should be a natural tension between society, the voluntary sector and the state. That is unavoidable. The last thing we would like is a voluntary sector that always said the state was good. I grew up in the Church of England, and it seemed to me that it was far too close to the powers that be. As a boy I would sing:

“The rich man in his castle,

The poor man at his gate”—

not something that I assume the Church of England sets as a hymn very often these days. Thankfully, Churches now see themselves as unavoidably criticising the status quo. Voluntary organisations, of course, should be doing advocacy and campaigning. I should say to the noble Lord, Lord Patten, that I am not sure that I do see a clear difference between campaigning and advocacy.

When I was doing the consultation on the Transparency of Lobbying Bill, I met the Alzheimer’s Society, which told me about its dementia campaign—an absolute classic of a campaign—to raise public awareness on an issue to which society, the state and the media had not been paying sufficient attention. The noble Baroness, Lady Pitkeathley, talked about the carers campaign that had very much the same effect. That is precisely one of the many roles that the voluntary sector should have.

However, we all understand also that there is a point at which campaigning and advocacy becomes political in a partisan way, and therefore approaches a boundary over which campaigners should not step. I know Charity Commission paper CC9 almost off by heart now. CC9 is relatively clear and therefore the challenge made by the noble Lord, Lord Finkelstein, is one that is unlikely to be offered.

Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Lord Hodgson of Astley Abbotts Excerpts

Tuesday 5th November 2013 Lords Chamber

Moved by

[Lord Hodgson of Astley Abbotts]

55: Schedule 2, page 55, line 5, at end insert—
“( ) Before dismissing the Registrar, the Minister shall consult the Speaker of the House of Commons and the Lord Speaker in the House of Lords.”

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, in moving Amendment 55, I apologise to the House for not having been in the Chamber for the debate immediately preceding the dinner break, where some aspects of the position of the registrar of lobbyists were discussed—how he will be appointed, who can be appointed and some method for reporting on his performance. My amendment is, at this stage of course, a probing amendment, and is concerned with the other end of the appointment, the question of dismissal.

Paragraph 3(6) of Schedule 2 says:

“The Minister may dismiss the Registrar if the Minister is satisfied that the Registrar is unable, unwilling or unfit to perform the functions of the office”.

Those are quite big words, capable of pretty wide interpretation. Rather gratifyingly, after I had tabled this amendment, I was written to by a number of groups that are interested in this: the Alliance for Lobbying Transparency and a group called Spinwatch, which said it thought this was an issue worth probing.

As I said at Second Reading, the registrar of lobbyists will have a pretty key role in the efficient functioning of the new system. From time to time, for he or she to be effective, he or she will be required to be disobliging—to lobbyists, of course, but also to be prepared to speak truth to power, which can be quite uncomfortable. As I have just explained by reading out the clause, the Minister has summary powers as far as the removal of the registrar is concerned.

I reflected on what might be done to provide what might be described as a little air cover for the registrar in the work that he is doing. I looked at two examples. Both are bodies that have some connection to this Bill. First is the Charity Commission. Paragraph 3(3) of Schedule 1 to the Charities Act says:

“Before removing a member of the Commission the Minister must consult … the Commission, and … if the member was appointed following consultation with the Welsh Ministers, the Welsh Ministers”,

so he has no power to remove the head of the Charity Commission without at least having to go through an iteration with fellow members of the commission. More specifically, the Electoral Commission, the other body with which we are concerned, has a considerably higher threshold. Paragraph 3(4) of Schedule 1 to the Political Parties, Elections and Referendums Act says:

“An Electoral Commissioner may be removed from office by Her Majesty in pursuance of an Address from the House of Commons”.

I thought that, at least to get the discussion going, it would be helpful to put down here that the Speakers of both Houses would have to be consulted.

This is wider than the Electoral Commission because lobbying concerns both Houses, whereas of course the Electoral Commission is concerned with elections, which, at least to date, do not concern your Lordships’ House. I am not wedded to these specific proposals. I do not suppose for a moment that the Government will accept them in their present form, but it is worth exploring how we are going to make sure that the registrar, who has this important role to play, has some protection if he or she wishes to carry out his or her work in a way that the Government of the day may find disobliging. I beg to move.

[Lord Martin of Springburn (CB)]

My Lords, I know that the noble Lord put this amendment down in good faith. I can see the negative aspect of consulting with the Speaker and the Lord Speaker. First, the legislation states that the person who shall appoint the registrar is the Minister, not the Speakers of both Houses. There is an old saying that if you hire the person, the unpleasant task of firing them is also yours. Things would need to get very serious indeed for a Minister to find that the registrar was so unfit that he or she would have to be removed.

There is a danger, which has happened with other appointees to the House, where the individual concerned could appear on the face of it to have a good personality and to be a likeable person; they strike up a rapport with the media and use the media against the authority that has decided to remove them. It is easy for the media to indulge in a good person/bad person scenario.

I think that the question that the media would ask is: have the Speaker of the House of Commons and the Speaker of the House of Lords been consulted? The Minister might find it quite easy to say, “Yes, they have been consulted”. If dismissal is to take place, it goes without saying that the Speakers of both Houses have agreed with that proposition. If the responsibility is given to the Minister via the Bill, any difficulties should be left at the Minister’s door.

I think that the parliamentary commissioner, whom we have for both Houses, is appointed for either four or five years nonrenewable. That is a satisfactory way to deal with the matter: the registrar gets a five-year nonrenewable appointment—I know that that is not what the amendment provides. Then, when there is a parting of the ways, there are no hard feelings, whereas the Bill talks about a third renewed appointment. I have not looked fully into the responsibilities of the registrar, but I know about the parliamentary commissioner. If the third reappointment is not given, it would be considered a slur on the incumbent.

I understand that in the 1950s and prior to that, no one bothered the Speaker or the Lord Chancellor—they did not have a Lord Speaker. In recent years, the Speaker has been attacked for many reasons, and he or she is an easy target because the rule for a Speaker is that you do not respond to a press attack. That makes him or her a very easy target. I would be happier if the Minister who made the appointment made the decision. It would take a genius of a registrar to get things so badly wrong as to get him or herself sacked. In such a controversial situation, we should leave both high offices out of the legislation.

[Lord Wallace of Saltaire (LD)]

My Lords, I recognise that this amendment, like some of those we were discussing in the previous group, is concerned with reinforcing the independence of the registrar in appointment, accountability to parliamentary committees and obstacles to what might be challengeable dismissal. Let me reassure noble Lords that the Government are committed to ensuring the independence of the registrar. The registrar’s ability to operate independently is clearly essential for the successful operation of the register.

The amendment specifically concerns potential dismissal. The Government are confident that the provisions as drafted will assure the independence of the registrar without those reinforcements. We will, however, continue to listen to and explore all suggestions for reiterating and firmly establishing that independence. Having given that assurance, I urge the noble Lord to withdraw the amendment.

[Lord Hodgson of Astley Abbotts]

My Lords, I am grateful to the Minister for that reassuring response. I am also grateful to the noble Lord, Lord Martin, for raising some of the practical issues. I tabled the amendment just to have a discussion about who can provide some back-up to the registrar, if needed. I think that the Minister has shown a willingness to listen. I am grateful for that and, in the circumstances, I am happy to withdraw the amendment.

Amendment 55 withdrawn.

--- Later in debate ---

[Lord Hardie]

My Lords, I agree with the noble Lord, Lord Norton of Louth, and support the amendment proposed by the noble Lord, Lord Campbell-Savours, for the same reasons. I also support the amendment proposed by my noble friend Lord Martin of Springburn but for a different reason from that given by the noble Lord, Lord Tyler. The example the noble Lord gave of meeting the employer in the company of someone who was both a lobbyist and a newspaper reporter highlights the need for a code of conduct. What is there to stop the lobbyist in that situation from sitting in on a meeting and then rushing away and phoning his newspaper to tell them he has a scoop—or whatever it is called nowadays—that the factory in Springburn has or has not been saved. More subtly, he could tell one of his fellow reporters. Therefore it is important that the distinction is maintained. Of course, if there was a code of conduct I would hope that that would be contrary to the code and the lobbyist could be deregistered, or whatever the appropriate word is.

[Lord Hodgson of Astley Abbotts]

My Lords, I support this issue. If you are regulated by the Financial Services Authority you have to mention it. There is a very substantial series of penalties and enforcement procedures if you fail to comply with the authority’s regulations. We need to be clear in our own mind whether this is going to be seen as the kitemark, whether it is going to be permitted as the kitemark and, if it is, how we make sure the kitemark standards are achieved.

[Lord Gardiner of Kimble (Con)]

My Lords, first I thank the noble Lord for initiating what has been an interesting debate. I entirely agree with the noble Lord that parliamentary images should not be used inappropriately. At present the use of the Crowned Portcullis is governed by the following statement:

“The principal emblem of the House is the Crowned Portcullis. It is a royal badge and its use by the House has been formally authorised by licence granted by Her Majesty the Queen. The designs and symbols of the House should not be used for purposes to which such authentication is inappropriate, or where there is a risk that their use might wrongly be regarded, or represented, as having the authority of the House. The House symbol is primarily used to authenticate communications from Members”.

It is clear that the use of parliamentary images is the prerogative of the House authorities, and for that reason the Government do not wish to intrude on the existing arrangements, although I understand entirely the point that the noble Lord is making.

--- Later in debate ---

[Baroness Hayter of Kentish Town]

My Lords, in supporting Amendments 88 and 90, which stand in the name of my noble friend Lord Campbell-Savours, I will speak in particular to Amendments 107 and 108, which are in my name and that of my noble friend Lady Royall.

The four amendments comprise the framework that would enable the register to be more than just a limp piece of paper. Taken together, they provide that if someone on the register breaches the code of conduct or the Bribery Act, or is found unfit to be registered as a lobbyist—for example, if they have brought Parliament into disrepute—the registrar would have the power either to remove them from the register or to impose an appropriate civil penalty. That is perhaps rather closer to what was suggested earlier by the noble Lord, Lord Hodgson of Astley Abbots, which is what happens under what is now the Financial Conduct Authority’s list of recognised people. So this is an important combination of amendments.

Of course, we agree that someone should have the right of appeal to a tribunal, as with any such threat to the removal of one’s profession and employment. As the noble and learned Lord said, there is already a well established tribunal that deals with appeals from the pensions regulator and other similar bodies.

[Lord Hodgson of Astley Abbotts]

Perhaps I may ask a question about the amendment. Is there some special significance to the word “breached”, as opposed to,

“convicted of an offence under”,

or is that just the drafting of the amendment?

[Baroness Hayter of Kentish Town]

I think that it is to cover breach of the code. The criminal term would not be appropriate for that. If the Government accept the amendments, I would be more than happy to accept any final tweaks, but the wording is designed to cover non-criminal matters such as breaches of the code of conduct.

In recognising and supporting the amendment dealing with an appeal, that is symbolic of our intention that lobbyists, like financial advisers, pension trustees, lawyers or accountants, should aspire to being members of a profession, with all the obligations of maintaining standards.

We know that the vast majority of lobbyists agree with that objective. They want their profession to be valued and acknowledged and therefore want us to ensure that anyone misleading the registrar or breaching the code should have no place on an approved register. We hope that the Government accept the intention behind the amendments and will respond accordingly. If not, we fear that there will be no mechanism other than sanctions for late filing to keep the register of lobbyists to a high standard.

Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Lord Hodgson of Astley Abbotts Excerpts

Tuesday 22nd October 2013 Lords Chamber

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I begin with an apology to my noble friend on the Front Bench and to the House for having been unable to be present for the first few minutes of his opening speech. I hope that the House will forgive me if I pray in aid that it is not every day that you introduce your own wife to your Lordships’ House, and that the family photographs in the Robing Room took rather longer than was anticipated. I apologise for any discourtesy to the House.

I turn to the Bill. Like many other noble Lords who have spoken, I share the view that it is an unfortunate but undeniable fact that public trust in our great institutions, particularly our political institutions, has declined in recent years. We can speculate about the reasons for this. Some say that in some cases it is exaggerated by journalistic supposition and not always based on fact. Others say there is an increasing public appetite for conspiracy theories. Last but perhaps not least, there is the increasing unreadiness of people to accept the inevitable unfairnesses in life, seeing them instead as the product of a system that is biased against them. Whatever the causes, the decline is there, and this is the challenge that we now face.

Other noble Lords have used the phrase, “sunshine is the best disinfectant”, and I share that view. A Bill that includes “transparency of lobbying” has my instinctive sympathy and support. Moving on from that very general statement, and changing my metaphor, if I may, we have to ask whether it does what it says on the tin. This is an area where I and a lot of other noble Lords have some questions.

When I have been considering the Bill, I have been applying a series of yardsticks by which I adjudge its efficacy: its comprehensiveness, its comprehensibility, its consistency and its proportionality. First, by “comprehensiveness” I mean: do the provisions of the Bill catch a sufficiency of the target group? If not, we all know how quickly organisations can and will reconfigure themselves to get around statutory provisions. Secondly, the Bill will sweep up a range of organisations hitherto unaffected. By “comprehensibility”, I mean: will such organisations, especially small ones, be able readily to understand what is required of them without devoting a fantastic amount of management time and/or professional fees and advice to their interpretation? Thirdly, a number of bodies will be concerned with enforcing this legislation. They include, obviously, the new registrar of lobbyists, the Electoral Commission and the Charity Commission. By “consistency”, I mean: will all the policies of the bodies be joined up? In other words, will they be consistent one with another? Fourthly, by “proportionate”, I mean: can we avoid the creation of yet another huge bureaucratic process-driven machine, so that while boxes are ticked judgment is forgotten?

I need to remind the House that I have undertaken two inquiries into the charity and voluntary sector for the Government, focusing, inter alia, on the regulatory burdens that have affected that sector, and that until about 12 months ago I was president of the NCVO, so it will not surprise your Lordships that most of my comments are focused on Part 2. Before I turn to that part, however, I would like to raise a couple of points in relation to Part 1. I note many of the concerns that other noble Lords have raised about the competence of this measure and its inability to catch a sufficiency of the target population, and no doubt we shall explore this in Committee.

I want to raise a point about the position of the registrar. The registrar will surely have an important, indeed key, role to play in this new system. From the legislation it seems to me that he will be its linchpin, and it will be very important that he carries out his task properly if we are to move towards restoring public trust. This may require him from time to time to take actions that are disobliging, certainly to lobbyists but sometimes to the Government of the day, of whatever colour it may be. Indeed, some may argue that if he was not occasionally disobliging, he probably would not be doing his job very well. Yet when you look at Schedule 2, you see that his position is very weak indeed: he may be dismissed by the Minister on the grounds that he is unable, unwilling or unfit. That seems to be a pretty peremptory way to be able to treat this official, particularly when you compare it with the protection that appears to be given to members of the Charity Commission, let alone that afforded to members of the Electoral Commission. I would appreciate a few comments from the Minister on that point.

I turn to Part 2. Early in the proceedings on the Bill in another place, we received some pretty heated comments from charities and voluntary organisations about the impact of Part 2, suggesting, sometimes in terms, that it represents the end of the world as we know it. This is some of the substance that illuminated the background remarks by my noble friend Lord Tyler. Recent comments seem to have been more moderate in tone, and I welcome that because in my view merely to have passed a public benefit test does not excuse an organisation from the need for some level of scrutiny—rather the reverse, since charitable status carries with it many privileges, not least an element of subsidy from the taxpayer through gift aid.

I, for the reason mentioned above—my work with the sector—am a passionate supporter of the charity sector and all that it stands for. However, it needs to keep its credentials burnished bright, particularly in the eyes of the general public. Its reputation remains high among the general public, but we are all aware of how quickly reputations can be lost and of how, once lost, they are extremely hard to recover. The glory of the sector is that it is of all political parties but of none. That must be a distinction that we should try to preserve as we consider the provisions of the Bill.

Having said that, the sector has some very reasonable concerns about aspects of Part 2. Many noble Lords have talked about the confusing nature of Clause 26 on controlled expenditure. Noble Lords raised the particular issue that the cost of volunteer time is included. My noble friend Lord Phillips got up and said that he would shoot this canard; I am not quite sure if you can shoot one, but he dealt with it very effectively by quoting from the PPER Act. I hope that he is right. He is a very eminent charity lawyer, while I am not a lawyer at all. However, reading Schedule 3 to the Bill, which amends qualifying expenses, in connection with that section of the briefing from the Electoral Commission which is entitled:

“What the changes mean for campaigners’ plans”,

I feel a scintilla of doubt. I will be delighted to be put right and to be told that I have got it completely wrong, but I seem to feel the ground shifting under me slightly. Therefore, this and other questions raise the issue of the comprehensibility test. We need to spend quite a bit of time in Committee getting the Government to explain in detail the practical implications of what is intended here.

When he comes to wind up, my noble friend may be inclined to say that a great deal of guidance is already available. Of course, that is absolutely for sure. CC9, which I believe the noble Lord, Lord Ramsbotham, referred to, which is the Charity Commission guidance, Charities, Elections and Referendums, runs to 35 pages, with a three-page addendum published in January 2011. The Electoral Commission’s guidance for non-party campaigners runs to eight pages, with a further eight-page addendum. To put it no higher, there are four documents and if noble Lords read them—and I am sure that many noble Lords have done so—they are not easy to synthesise. At their heart is the problem of differentiating between policy work and campaigning, and the different interpretations put upon those two very important words by the two different bodies, the Electoral Commission and the Charity Commission.

That takes me to the point about consistency. We need to find some joined-up thinking between the Government’s lawyers, those of the Electoral Commission and those of the Charity Commission. Perhaps at least a proportion of the steam could be taken out of these issues if some joint guidance could be agreed between the two commissions and published. I do not underestimate the difficulties of getting the two commissions to collaborate—I have been trying for some three years to get Companies House and the Charity Commission to agree a common standard form for charitable companies. To describe my progress as “glacial” would be altogether too rapid a description. However, my noble friend would do a great deal to reassure people if those two bodies could be brought together and made to produce something that made sense and which did not require charities to produce two separate sets of guidance and pull them together.

Finally, I turn briefly to proportionality. I share the view that the reduction of limits is unreasonable, particularly that to £2,000. The £2,000 limit, applied to Wales, is a figure that would exclude almost any activity. The hire of a hall, some staff costs and publicity could go over the limit. In his very interesting remarks, the right reverend Prelate the Bishop of Derby talked about the importance of local campaigns. This is where that particular low level will be most keenly felt. I invite my noble friend to reflect on how we would deal with Kidderminster Hospital. That was a single issue, fought in a single constituency; how would it be dealt with under these provisions, and what would be the impact? I am not quite sure what it would be, but I am sure that it would have some important things, and maybe some challenges, for the people of Kidderminster, who passionately want their hospital preserved, and that these regulations might make that much more difficult.

There is some important work to be done on coalitions of charities working together and the way that they have to report separately. It is incredibly bureaucratic and burdensome for every charity member of a coalition to have to report about all the other members of that coalition, not only every quarter but every week during an election campaign. Can we not find some way to create a coalition leader that could undertake this work on its behalf?

I have overrun my time. To conclude, I do not doubt that there are important issues and challenges here, and the Bill seeks to address them. However, we will have a lot of work to do in Committee and thereafter if we are to avoid the rather dismal outcome predicted in that leader in the Financial Times on 9 September, entitled:

“A rushed bill will deliver bad law”.

European Union Committee: 2012-13 (EUC Report)

Lord Hodgson of Astley Abbotts Excerpts

Tuesday 30th July 2013 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, it is a great privilege to follow the noble Lord, Lord Kerr of Kinlochard. A lifetime at the diplomatic coalface has given him analysis and perspective that I cannot hope to match, and I listened with great interest to his suggestions.

I am just an ordinary member, now of Sub-Committee E and previously of Sub-Committee F. This has given me the opportunity to study in detail four very different chairmen: my noble friends Lord Jopling and Lord Bowness, the noble Baroness, Lady Corston, and, previously, the noble Lord, Lord Hannay. Each has been extremely effective and has been able to corral their potentially recalcitrant flocks with humour and good sense. It has been a pleasure to serve under them all. The other group to whom I add my thanks are the clerks, who do such terrific preparatory work and manage to turn the meanderings of the committees into a coherent whole. In my view, the country and the House owe a great debt of gratitude to both these groups.

As a member of Sub-Committee E, I served on the joint Select Committee considering the opt-out decision but I am not proposing to cover that issue now. The House has debated it at length and I agree with the noble Lords, Lord Judd and Lord Hannay, that the delivery of the Government’s response was unacceptably late. However, we have had a good chew of that and candidly, if I am honest, I am suffering a bit from opt-out or opt-in fatigue, at least for the time being. We will no doubt return to that issue in the autumn.

Instead, I will focus first on another of Sub-Committee E’s reports: that on The Fight against Fraud on the EU’s Finances. The evidence that the sub-committee received indicated that the official figure of fraud—which, as we have been told, was £404 million—was a woeful underestimate and that the real figure could be as much as 12 times higher: around £5 billion.

We also received evidence that OLAF, the European agency charged with fighting fraud, did not always receive the full-hearted national co-operation that it deserved. In these circumstances, the Government’s participation in our inquiry, or perhaps I should say their non-participation, is disappointing. Further, the Government’s response to the sub-committee’s report, received only recently, did not seek to rebut the sub-committee’s suggestion that EU fraud could be as high as £5 billion, merely recording, as the noble Baroness, Lady Corston, said, that it was not a figure that they recognised. This smacks of a good deal of complacency. Fraud is theft—theft from the taxpayer, whose interests every Government in the EU ought to be protecting. Moreover, fraud, if not investigated and prosecuted with vigour, has an unhappy habit of spreading. I hope for a more vigorous approach by the Government on this topic in future.

[Lord Davies of Stamford]

I am grateful to the noble Lord for giving way. Does he agree that, given the importance of fraud—I think that the whole House will be with him on everything that he said on that—it might have been a good idea if the Government had decided to join in with the initiative of setting up a European prosecutor’s office with a specific remit of pursuing fraud cases in the EU?

[Lord Hodgson of Astley Abbotts]

As always, the noble Lord, Lord Davies, has a seductive tone to his voice, but of course that is a completely different issue. We are trying to ensure that OLAF, which is the European fraud investigative committee, operates effectively. That is what we need to concentrate on first rather than, as my noble friend Lord Howell has said, superimposing yet another body that will be out of touch with the reality on the ground.

I shall focus the rest of my remarks on Chapter 10, the future look. I have written to the noble Lord, Lord Boswell, to give him some advance warning of what I wish to raise and what I would like the EU Committee to look at in future: the implications for this country of the continued free movement of labour within the EU—one of the pillars, as the noble Lord, Lord Hannay, firmly pointed out, on which the whole EU structure rests. However, I fear that the UK, uniquely, is already facing some strains from this free movement, strains that I fear will almost certainly become more severe and increase over the next 10 to 20 years.

A couple of figures may help to illustrate the point. England, not the United Kingdom, has now overtaken the Netherlands as Europe’s most densely populated country, with some 400 people per square kilometre. By comparison, France has 125 people per square kilometre, which is one-third or one-quarter as densely populated, and Germany has 260 per square kilometre—about two-thirds as populated. That is today, but over the next 15 years to 2027, if you believe the mid-projection by the Office for National Statistics, the UK’s population—here I am talking about the UK, not England—will increase by 7 million people, from 63 million today to 70 million then. What does this mean in comparable statistics? Last year, the UK’s population grew by just short of 1,100 people per day—a small village every week; a parliamentary constituency every three months or so. By contrast, Italy’s, France’s and Germany’s populations are falling, and on present projections the UK will overtake Germany to become the most populous country in Europe by the early 2030s.

Should we worry about this? Before answering that question, one needs to make it clear that race, colour and creed play no part in the debate. Indeed the social strains, if social strains there be, are likely to be felt most harshly in the minority communities. So should we worry? Physically, we can certainly fit the people in. Bangladesh has 1,400 people per square kilometre compared to England’s 400. However, it will be up to wiser minds than mine as to whether we wish to reproduce Bangladeshi living conditions in the UK.

Concerns revolve around two specific issues. First, there is the impact on our environment—the pressure on the green belt around our cities, the impact on our countryside, especially in the south-east, and so forth. These are important to me but are not the critical issues. For me, the critical issue is the potential crowding out of our native-born population—please note that I say, and I mean, “native-born”; that is not another word for white but, rather, means anyone and everyone who was born here—and the consequences of that crowding-out on our social structure. If the default option for British industry and commerce is to call for more immigration as opposed to upskilling our own population, we run the risk of creating a sullen, disconnected, unemployed and in due course no doubt unemployable underclass—an underclass that, in the minority communities, may well find extremist activities attractive. That is not good for us as a country or as taxpayers.

I shall give the House a practical example. I have a house on the Shropshire/Herefordshire border. As I speak here today, there are about 4,000 people from eastern Europe picking fruit. They are here legally, they behave well, they work hard and at the end of the season all, or at least most, of them will go home. However, there are unemployed locals in Herefordshire and south Shropshire. Talk to the fruit farmers and they will tell you that the locals will not work hard enough, are not reliable and turn up once and do not come again. Talk to the locals and they will tell you that they cannot get the farmers to recruit them because they prefer to recruit in bulk from eastern Europe in the hundreds. Where does the truth lie? I have no idea, but there is an issue here that at some point we have to address.

An argument often advanced for increasing immigration is the need to provide additional people to look after, and compensate for, our ageing population. This has extremely superficial attractions but it ignores the inexorable laws of ageing and compound interest. Today’s increased number of young people leads inevitably to tomorrow’s increased number of old people, who will in turn require still further increases of young people to compensate. Indeed, it has been calculated that if we wish to keep the same number of workers to pensioners as at present—it is about 3.5 to 1—we will already need an extra 27 million more workers by 2050: a 40% increase in our population.

To conclude, while free movement of labour within the EU is only part of the challenge, it is an important part and one which an EU committee will be uniquely well placed to address because it can do so in the non-partisan, equable, evidence-based way at which it excels and which this subject, above all, demands. I take a fairly hard-nosed approach to this country’s relationship with the EU but I do not doubt that at root it has been of great benefit to the United Kingdom. The 900,000 or so graves in France and Belgium are mute witnesses to that fact. However, outside the M25 in particular, the apparently inexorable rise in our population is causing concern. We need to reassure any concerned people that Parliament is aware of those concerns and prepared to investigate them fully, no matter how sensitive they may be.

Martin Wolf, the FT economics commentator, wrote:

“Society cannot function without a majority willing to play by the rules, without individuals demonstrating on a minute-by-minute basis their trustworthiness, reliability, courtesy and self-reliance”.

We need to ensure that we do not stretch these qualities to breaking point.

Civil Society

Lord Hodgson of Astley Abbotts Excerpts

Thursday 18th July 2013 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, I begin by congratulating the noble Baroness on giving us the chance to discuss this important matter and, indeed, on drawing the attention of the House to the multifaceted nature of civil society.

Before I go into my remarks, I have what the police would call “form” on this matter and need to declare some interests. I chaired a task force for the Government that produced a report, Unshackling Good Neighbours, which sought to look at what stopped people volunteering and giving money and what stopped smaller charity and voluntary groups growing. My reward for that was to be appointed the official reviewer of the Charities Act. I produced a report a year ago and here I have to chide my noble friend on the Front Bench somewhat. The report, which contained 100 recommendations, was deregulatory and generally welcomed by the sector but has yet to receive an official response from the Government. It is 12 months now and I have to say to my noble friend that I do not think that that is quite good enough. The sector is anxious to hear whether any of the ideas which I proposed, after consultation, are going to be proceeded with, and the Government need to hurry up. In producing those two reports, I visited many parts of the country and saw at first hand what wonderful work was being done by men and women, often in small groups and with very limited resources, tackling some of the most deep-seated and intractable problems of our society. They deserve our support and encouragement.

I said that I wanted to congratulate the noble Baroness, Lady Prosser, on introducing this debate. I do so, but she will not be surprised to learn that I do not really agree with her analysis of the situation. I will not go through a point-by-point rebuttal but I will say that she completely failed to mention the appalling economic situation that this Government inherited from the previous Administration. There is no way that the charity and voluntary sector can be insulated from that. Indeed, the Government are to be congratulated in many ways on what they have managed to achieve.

I draw the House’s attention to three important aspects of government policy. The first is the coming into force in January of this year of the Public Services (Social Value) Act, which for the first time imposes a duty on commissioners to consider the social, economic and environmental benefits before commissioning a contract. That is a really important way of getting local input and commitment to projects. The second aspect is the changes in gift aid, which have simplified the whole process considerably through the Small Charitable Donations Act. The fact that no donor declarations are needed for smaller amounts of gift aid is really important and helpful to small charities in boosting their ability to raise money and cutting down the amount of paperwork they have to undertake. Last, and most important, is the development of the social investment market, which recent reports suggest grew by 25% last year. This is a win-win situation: more funding for the voluntary sector and the emergence of the UK as a world leader in this whole area of social investment and in the way in which we can carry it out. Those three aspects are extraordinarily important and the Government are to be congratulated on having pioneered them.

My noble friend would not expect me not to have a shopping list of things that the Government should be going on to execute over the remainder of this Parliament. I offer him two or three that he should get his officials to look at with expedition. The first is the rather technical issue of trustee duties. Our trustee law currently makes no distinction between trustees of an ordinary trust and those of a charitable trust. Preservation of capital is exceptionally important in an ordinary trust—you need the capital preserved in your pension fund in order to pay the pension. However, it is perfectly possible for trustees of a charity to spend some capital in pursuance of their charitable objectives. That is an important difference and I hope that the Government will persuade the Law Commission, which is beginning its review of charity law, to begin to undertake a really serious look at this in order to draw a distinction in law between these two types of trust in the future. It would have substantial practical implications and benefits for charities.

The second issue is volunteer and trustee liability. I discovered that there is a perception of risk out there. It is true that some of it is based on myths and some of it is based on completely counterintuitive outcomes to legal cases, which have been well publicised. However, we live in a litigious age and we need to offer our volunteers, trustees and workers in charities and the civil society sector protection and the understanding that the law is on their side when they are acting sensibly. I hope that the Government will continue to look for ways to provide that reassurance. I am sure it will have a great benefit in terms of the readiness of people to volunteer.

The third issue is commissioning. Commissioners tend to be risk-averse. If we are going to find a way to encourage the voluntary sector, we are going to have to provide commissioners with some air cover so that they are prepared to chance their arm, so to speak. We could establish yardsticks that the Government would help promulgate as best practice. The Government would not have to enforce them, but they could be there as a yardstick. These could relate to, for example, the number of tenders that you call for in relation to the size of the contract. You can have only one winner. If you have six or seven tenders, you have to have five or six losers, and all the work and cost that has gone into preparing those tenders is wasted. You could also have yardsticks about the cost of preparing a tender and the cost of monitoring in relation to the size of the contract. All these things would help the charitable and voluntary sector compete more effectively, as it would not be put under undue or unfair competitive pressure.

The last issue is that we are clearly going to see voluntary groups and charities begin to have to form syndicates. They are going to share services with other charities that are providing different expertise to that syndicate, which, of course, brings in the issue of VAT on shared services. Value added tax regulations are a bourn from which no traveller returns and are exceptionally complicated. The Government could do a great deal to help the development of syndicates and to help consortia of smaller groups compete in the brave new world if the VAT situation could be addressed.

Finally, I should like to address the question of failure. We should be prepared to expect and accept that some charities and voluntary groups will fail. The voluntary sector is tackling some of the most difficult and hardest-to-reach areas of our society and not all plans are going to succeed. My noble friend Lord Cope referred to the high failure rate of commercial enterprises and the charitable and voluntary sector is not exempt from similar ratios. Failure is not the same as fraud, but sometimes in the voluntary sector the two are confused. I hope the House will agree that this is not a matter to be defensive about. Indeed, some might argue that if there were not failures that would show that the sector had lost some of its dynamism and its entrepreneurial instincts.

Crime: Sexual Violence

Lord Hodgson of Astley Abbotts Excerpts

Wednesday 6th March 2013 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, I offer my thanks, briefly but sincerely, to the right reverend Prelate for having given us the chance to debate this important matter. I need to draw the House’s attention to my involvement with the charity Freedom from Torture, which offers solace, comfort and rehabilitation to refugees in the UK who have been tortured overseas. All too often, I am afraid, that torture involves rape.

In the rest of my remarks, I want to focus on an aspect of this terrible topic that has not been raised before: that is to say the rape of men, young boys and adults. It is an equally ugly but less reported crime and one where perpetrators are rarely, if ever, brought to justice. Male rape does not fit easily into the narrative. As my noble friend Lady Eaton said, men are supposed to be strong and dominant, not vulnerable and weak. Further, male rape, which will inevitably involve anal penetration, gives rise to particularly horrific injuries. In countries where homosexuality is culturally frowned upon or remains a criminal activity, such injuries are even more likely to remain unreported and untreated.

The right reverend Prelate referred to the Democratic Republic of Congo. The American Medical Association, which surveyed that country, said that 30% of the women had been raped but that 22% of the men had been raped as well. It is not just in Africa that these stories remain unheard. One of the few academics to have looked into the issue in any detail is Lara Stemple of the University of California’s Health and Human Rights Law Project. Her study, Male Rape and Human Rights, notes incidents of male sexual violence as a weapon of war or political aggression in countries as diverse as Chile, Greece, Croatia, Iran, Kuwait, the former Soviet Union and the former Yugoslavia.

Finally, as we inch towards the exit door in Afghanistan we are in danger of leaving behind an endemic male-rape culture. As the BBC reported recently, every police base has at least one “chai boy”, who usually looks between 13 and 15 years old. Police commanders often see it as their right to abduct a local boy from his family and keep him as a servant and sex slave. Is this what we went to Afghanistan to preserve?

Charitable Incorporated Organisations (Insolvency and Dissolution) Regulations 2012

Lord Hodgson of Astley Abbotts Excerpts

Tuesday 27th November 2012 Grand Committee

I am confident that the CIO will be a very popular and beneficial legal structure for charities, and I therefore commend these instruments to the Committee. I beg to move.

[Lord Hodgson of Astley Abbotts]

My Lords, I welcome the regulations. They are an extremely useful and important addition to the charity regulation framework. I have carried out two reports for the Government, the first called Unshackling Good Neighbours and the second the review of the Charities Act, Trusted and Independent—I should like to say to the Minister how helpful his staff were in the preparation of that; they worked very on it and were of great assistance. In both those reports, it was clear that the absence of any legal air cover was a considerable deterrent to people serving as trustees. People feel, rightly or wrongly—despite the lawyers saying that there are no cases—that there is a risk. The regulations provide an important bit of air cover that will encourage them to come forward and serve as trustees.

I hope, however, that the Government will not forget about the importance of finding ways in future to afford additional protection to volunteers. I know that the provision of protection is not part of these statutory instruments and I understand why it could not be included. However, volunteers remain concerned about what they see as counterintuitive judicial decisions that leave people feeling exposed when they are undertaking one sort of volunteering activity or another.

These statutory instruments are important, valuable and welcome. As my noble friend on the Front Bench said, the protection carries with it privileges—and with privileges comes responsibility. We need to stress this is because there cannot be a register of charges. Therefore, to some extent creditors between each annual report are flying blind. That is inevitable; we cannot get round it. We must emphasise to trustees of CIOs that they have a responsibility to behave properly. It would be a terrible shame if this new and very valuable corporate form were to be damaged by early malfeasance and misadventure. Equally, it would be helpful if the Minister would confirm that the normal provisions of corporate behaviour will apply to trustees of CIOs. As any director of a limited company knows, trading while insolvent is the most serious thing for which you are personally liable. This should apply to CIOs that act improperly.

I was pleased to hear the Minister talk about the ability to disqualify trustees of CIOs, and to apply the disqualification regulations to them. Perhaps I could nudge his elbow again. The Charity Commission is very limited in its powers to stop trustees of charities—not CIOs—who have behaved badly from becoming trustees of other charities. Trustees can move around quite easily. We need to find ways to ensure that the Charity Commission can keep the rotten apple out of the barrel, and prevent it finding somewhere else in the barrel a bit later.

I share the Minister’s view that this has been a long time coming. The Charities Act became law in November 2006. It is now the end of November 2012. Even by the standards of Whitehall, progress can best be described as glacial. As he warned us, some timetabling issues lie ahead. The Explanatory Notes make it clear that new CIOs will come into force reasonably quickly. Perhaps the Minister will confirm when the commencement provisions will be laid. Obviously we are some way away from the conversion of existing CIOs. After six years it is not surprising that there is a certain amount of pent-up water behind the dam. I hope that the Government will find ways to encourage the Charity Commission to use modern, online techniques and proceed as quickly as possible to a situation where every trust that wishes to convert to a CIO is able to do so.

Perhaps I may raise with the Minister another bee in my bonnet. It concerns repetitive, duplicative and overlapping returns. I am not sure where we are on the return that a CIO will make to the Charity Commission. We want to make sure that it is as focused as possible. Less is often more. There is the example where we have our credit cards changed and we get four pages of closely packed type telling us that there have been changes, not particularly identifying what is what and what has been changed.

I hope that when the new forms are prepared, we really focus on what is needed, not just have a splash of paint across the whole of the subject. Information takes a lot of getting together for charities; it is a great source of economic friction for them. Sometimes they feel that a hell of a lot of information has to be collected for not much purpose other than ticking a box. We want to ensure that we are gathering information that really helps the monitoring—for the public and the supporters of those organisations to decide whether they are good and worth while.

The Minister will not expect me to leave the subject without saying that, for a year and a half now, we have been pressing the Charity Commission and Companies House to find a way to agree an individual return. There are more than 30,000 charitable companies who are making two separate returns. It cannot be beyond the wit of man, let alone the wit of Companies House and the Charity Commission, to find a single form that could serve both purposes. That would be 30,000 forms in the bin.

With that rather disobliging remark at the end, I entirely welcome the regulations, but they will reach their full flowering only when every charitable trust that wishes to convert anywhere in the country, whether old or new, big or small, rich or poor, can do so. I hope that the Government will ensure that pressure is kept on the Charity Commission so that that happens as soon as possible.

[Lord Methuen]

My Lords, as chairman of the trustees of an almshouse trust, we have been considering going the alternative way of incorporation. We welcome the measures and shall be examining them at our meeting on 7 December. We think that this is a much better way to go than the current incorporation methods. We welcome the protection that this will give our trustees and hope, as the noble Lord said, that it will encourage more people to come forward as trustees.