(10 years ago)
Grand CommitteeMy Lords, I am grateful to the noble Lord, Lord Mancroft, for outlining the background to this amendment and the reason for it with such admirable clarity, born of the great experience that he has in this field. As a former chair and now vice-president of RNIB—which interests I declare—I put my name to the noble Lord’s amendment because I have had first-hand experience of the restrictive effect of the current regulatory regime for society lotteries on the charity’s fundraising potential, which I thought it relevant to place before the Committee in its consideration of this amendment.
Society lotteries are minnows by the side of the National Lottery but are nevertheless a useful tool in the fundraiser’s tool-box. They could be an even more useful tool if they were freed from the restrictions and red tape which the noble Lord, Lord Mancroft, talked about and which significantly hobble fundraisers who seek to use society lotteries to maximise their income.
RNIB currently runs two society lotteries: one for RNIB itself and one for Action for Blind People, which is part of the RNIB group. It raises £8 million a year through its society lotteries, which provide valuable funding for vital services such as the RNIB helpline, sight-loss advisers in hospitals—who are there to pick people up at the point when they are told that they are going blind—and talking books, which many people describe as a lifeline.
Society lotteries are a successful fundraising vehicle for RNIB but, as I say, this success could be increased were there to be a relaxation of the limits imposed on prizes, draws and turnover. In particular, the charity is restricted in how much it can generate in charitable income through its society lottery due to the £10 million annual cap on turnover or sales. This is difficult to understand, as the noble Lord, Lord Mancroft, said, because this is the only form of fundraising that is capped in this way. RNIB thus well illustrates how charities can have their ability to raise funds restricted by unnecessary and burdensome regulation.
RNIB also has concerns with the regulatory regime which governs licensing. Society lotteries have achieved strong growth in recent years, reflecting their popularity with the public as means of raising money for good causes. However, if RNIB wants to sell more tickets, and thereby raise more money, it would be limited by the income and ticket sales caps. It would therefore have to register a new society lottery, which would mean that much needed charitable funds would be spent on duplicating auditing, legal, licensing and other bureaucratic costs.
As provided for by this amendment, an increase in the permissible amount of ticket sales for a single draw would enable RNIB to raise more money while at the same time limiting costs. An increase in the annual income cap would enable it to maximise its fundraising. Furthermore, if prize value limits were increased, more people could be attracted to play RNIB’s lotteries, thereby boosting the overall amount raised through tickets sales. In addition, as the noble Lord, Lord Mancroft, has explained, the 80:20 rule, whereby 20% of proceeds have to be returned as profit to the good cause, restricts new product launches and can stifle innovation. For smaller lotteries, such as Action for Blind People’s, the requirement that 20% must always be returned can stifle growth, as it makes it difficult to invest heavily in new acquisitions. This could be alleviated by allowing lotteries to apply the 20% rule to the financial year as a whole rather than to each individual lottery.
Society lotteries are a valuable form of fundraising, not just for the RNIB but for charities across the country. They provide much needed funding for highly valued services, and evidence shows that were modest deregulation to take place, it could allow good causes across the UK to increase the amount that they receive through this popular form of fundraising.
My Lords, I would like to ask a question. I know nothing about the detail of this, but I take it that these four elements that the noble Lord has described do not hang as a package. In other words, I am saying to the Minister: just for once, pick one. Okay? The case seems overwhelming. I have spent more time in this Grand Committee than I have done at any time since I was in the Minister’s position, so I know what it is like; because there is no vote, you can stonewall and accept nothing, hoping that, by the time you get to Report, you can wing it through.
Given the figures that the noble Lord, Lord Mancroft, gave, I would also say to the Minister that this is not a threat to the National Lottery. I understand that when the lottery was first formed, a lot of constraints were built in to protect it. For example, someone tried to start a lottery betting on the six numbers, and I think that it was banned because it would drain off other funds. The National Lottery is now so well established that there cannot possibly be any threat to it.
There is another factor here, if I have got it right, and I do not declare an interest but I do the odd lottery myself: this would mean more choice for the player. In the National Lottery you do not get any choice. We know what the overall picture is—it is a public good, we know that massive benefits to sport, culture and our heritage have come from it, and long may that continue—but we do not get any choice. However, with the society lotteries you get a choice. You can make that your key.
I will also say, although I know that these words are not used often these days by the Government, that this is classic “big society”. Does the Minister remember that? All the elements of society lotteries—individual choice, very small beer compared to the National Lottery but substantial benefits to the societies involved—make them the big society. They fit in exactly with what the Prime Minister used to talk about. It was a good idea; he just could not sell it. The fact is that these schemes seem to fit with that.
I say to the Minister: go on, just pick one of them. I am sure that he will still be there when we get to Report—it is too late for reshuffles now—so pick one that is really good and go back to the boss, as I used to do occasionally. I used to go back and say, “Look, we’re going to be defeated on this”, and we did not really want all the mess connected with that. I know that we cannot have a vote on this, but the fact is that on Report this could be a bit tricky at the wrong time of day. It would be a lot better if the Minister showed a bit of willingness, and I think he should be prepared to accept one of them.
(10 years, 10 months ago)
Lords ChamberI would be most grateful if the Minister would reflect on one suggestion. I think that he would agree with me that Clause 29 is not the easiest of clauses to understand, particularly for those who are not familiar with legislative language. Would the Minister be prepared to have a conference with the Electoral Commission to try to draw up some mutually agreed guidelines to, and interpretation of, this new law? It is very important, and that would be extremely helpful—particularly bearing in mind that we have this ridiculous businesses of the Bill being in another place tomorrow. I cannot see the reason for that; maybe the Minister could comment on it.
Before the Minister finishes his speech, may I, too, ask him a question, to which I would be grateful for a response? All the examples that he has cited seem to be hypothetical. What examples does he have of the kind of conduct that he is railing against actually taking place? Where is the mischief that he seeks to legislate against?
My Lords, it was probably at one of the consultation meetings that my noble friend Lord Wallace of Saltaire held when we were discussing these matters that we heard about one substantial organisation that spent a considerable amount of money at the last election—and, indeed, registered the fact that it had done so. It was made clear that one of its activities was to focus on individual constituencies. I do not criticise that organisation for doing that, but if people are going to do such things, there should be proper limits so that there is proper transparency.
With regard to the point made by my noble friend Lord Cormack, whether I speak personally or on behalf of Ministers and officials, I think that a conference with the Electoral Commission to ensure clarity of guidance on the constituency limits could be very worth while. I say “guidance” because interpretation is, ultimately, a matter for the courts, not the commission. I am not even sure—I am making this up as I go along—whether it should be restricted to Ministers, or whether it might also include the Opposition and other parties, and representatives of campaigning groups. Some sort of round table discussion might be very helpful before the final guidance is produced by the Electoral Commission. On the basis of what I have said, I again invite the noble and right reverend Lord to withdraw his amendment.
(10 years, 10 months ago)
Lords ChamberI understand that, but I do not understand why they have come out against it, because it must be based on an understanding that charities could in fact engage in activities that are regulated by this Bill.
My Lords, my name is added to this amendment and I do support it, but I think that we have been somewhat blown off course by the reference to this letter that we have had from the Charity Commission, which we have not had very long to consider, and also by the briefing that we have received from the Electoral Commission.
On the Charity Commission’s letter, I honestly think that this faces both ways: at one point the commission says that it is not in favour of an exemption but elsewhere it says that it believes in keeping the burden of regulations on trustees and charities to the minimum that is consistent with effective regulation. If that is what the commission is saying, then why on earth impose another burdensome layer of regulation on charities? Or is the commission saying that the regulation that it provides is not effective? I honestly think that the letter that we have received from the Charity Commission is not robust enough to sustain any argument and I do not think that we should be further diverted by it, certainly not today.
I agree that this has rather blown the debate off course and I think that the suggestion made by the noble and learned Lord, Lord Mackay of Clashfern, that this be taken away, that discussions take place and that we ask the Government to review the situation and come back with something at Third Reading, would honestly be the best way of proceeding.
My Lords, I think that I shall go with the suggestion that we defer debate on this until Third Reading. I will just throw one or two thoughts into the pot that have not yet been fully explored.
Charity law is currently very much under review. The noble Lord, Lord Hodgson of Astley Abbotts, has reported on the workings of the Charities Act 2006 and the Select Committee on Public Administration has looked into the operations of the Charity Commission. Both the noble Lord, Lord Hodgson, and the Select Committee on Public Administration issued reports last year recommending changes, and the Government have accepted many of those recommendations. In addition, the National Audit Office recently issued a report calling for a reform of the Charity Commission, and the Law Commission is looking at charity law and will report this year.
It is almost certain, therefore, that there will be significant reforms to charity law in the near future, so if charities are taken out of the lobbying Bill, which is the proposition here, there will be an opportunity, if necessary, to amend charity law and to see changes of this kind in a broader and wider context at a later date. The many arguments on why charities should be taken out of this particular Bill stand on their own, I think, and although we are giving great deference to the quangos, I find the comments of the noble and learned Lord, Lord Mackay of Clashfern, and others to be compelling. Possibly we should not be debating all those details if legislation that is specifically about the future of charities, charity law and the Charity Commission is in the pipeline. It would be better to defer our debate until then, but I would be very happy to see this brought back at Third Reading.
I thank the noble and right reverend Lord for giving way. Does he not agree that to be caught by the legislation the expenditure has to be “intended” to procure that effect?
The whole point of those provisions, which is where the sting is, is that you can campaign on and focus on an issue and that can be reasonably regarded as indirectly supporting a particular candidate or party, or you can even do so inadvertently. Let us be quite clear: charities are able to campaign on issues.
Then why does the Charity Commission guidance—and I have read carefully both its main guidance and its guidance in relation to the Electoral Commission—include a series of examples, just like the Electoral Commission, where charities may or may not be caught? This is a borderline area. Charities are able to campaign and to campaign vigorously, and many trustees encourage them to do so. Therefore, it is always possible for them to come within the scope of this provision.
If you take out charities, only two courses are open to you. Either you have an unlevel playing field so that you have a charity campaigning against a campaigning group which is not a charity, and the charity, if it were taken out, would be able to spend an unlimited amount of money, whereas the non-charitable campaigning group would have very strict limits on what it was allowed to spend, or the Charity Commission could set up a much stronger policing body than it has at the moment—one which would match that of the Electoral Commission.
I am grateful to the noble and right reverend Lord and I apologise for intervening again, but does he not agree that we are continuing to get bogged down in technicalities about the interpretation of very detailed points in this clause? If the point is taken that there will be discussions before Third Reading and we can look for something more fully considered to come back then, it will make a lot of sense to put into that review the points that the noble and right reverend Lord, Lord Harries, is dealing with at the moment.
My Lords, I take the point but it was important to state the argument because some people are understandably initially very attracted to this idea. It would lift the regulatory burden, and people are attracted to the idea of taking out charities. However, there are very strong, compelling and rational reasons why this should not be done, and that is why it is opposed by the Electoral Commission, the Charity Commission, the commission that I chair, the NCVO, ACEVO and all the others.
My Lords, I thank my noble friend Lord Phillips for raising the important issue of charities and seeking to exclude them from the regulatory regime governed by controlled expenditure for third parties. In Committee, we had a useful debate during which I indicated that some very important points had been made and undertook to give consideration to them. To those who ask the Government to take this issue away and to think about it, I say to your Lordships’ House that we have given this very serious thought. I probably spent more of my time on it than I had necessarily expected over Christmas and the new year in Orkney. I will not overegg it but I think my wife thought that it probably was more than was healthy.
With other Ministers, the Government have seriously thought about this matter and looked into it. Under present charity law, charities are organisations which must be established for charitable purposes only which are for the public benefit. An organisation will not be charitable if its purposes are political. Campaigning and political activity are legitimate and valuable activities for charities to undertake. However, this must be undertaken by a charity only in the context of supporting the delivery of its charitable purposes.
The Charity Commission and the Electoral Commission produce guidance for charities on campaigning and political activity. Both regulators acknowledge that there may be a narrow range of circumstances—noble Lords who took part in Committee will remember that the word given to me by officials was “sliver”, which I did not particularly like but was meant to show that it was a very narrow range of activities—in which charities may be compliant with charity law and also operate within the regulatory regime established by the Political Parties, Elections and Referendums Act 2000. I listened carefully to the speech of my noble and learned friend Lord Mackay of Clashfern. The Charity Commission guidance updated in January 2011 on charities, elections and referendum states:
“A charity may publish the views of candidates in local and national elections where these views relate to the charity’s purposes and publishing them will raise public interest and debate about the underlying issues. The charity must not encourage support for any particular parties or candidates”.
It goes on to say that “even if” a charity is,
“following the guidelines set out in this document and in Speaking Out: Guidance on campaigning and political activities by charities (CC9), if you use material that could be seen as indicating to the public that particular candidates or parties support or oppose your policies, it is possible that you may need to register as a third party with the Electoral Commission”.
Indeed, that has been the position following PPERA 2000. My understanding is that two charities registered in 2010 .
I admit that the circumstances may be very narrow but the important point to remember is that we are using an objective test. It is not a subjective intention of the charities: it is how a reasonable person might perceive what the charities have done. As the noble and right reverend Lord, Lord Harries of Pentregarth, pointed out, Clause 26(4)(c) states that,
“a course of conduct may constitute the doing of one of those things even though it does not involve any express mention being made of the name of any party or candidate”.
Applying that consideration and the objective test is the considered view of the Electoral Commission and the Charities Commission that there could be circumstances in which PPERA should apply.
I am sorry to intervene on the noble and learned Lord, but does he not agree that the test is only partly objective because the test is not what a reasonable person would make of what the charity has done but what a reasonable person would make of the charity’s intention?
My Lords, I can do no better than remind your Lordships of Clause 26, which states that,
“the expenditure can reasonably be regarded as intended to promote or procure electoral success at any relevant election for—”.
The point is that there is a distinction between an objective and a subjective test. It may be that if the charity was complying it was not intending, but if objectively it was thought to have done so it would fall into that narrow range of activity. The important point was made by the commission chaired by the noble and right reverend Lord, Lord Harries; namely, that it is the activity that is important rather than who is undertaking the activity.
I know that the House wants to move on, but the e-mail issued yesterday evening by Mr Rowley has been referred to by a number of noble Lords. He says:
“We recognise that there are some circumstances where a charity’s activities can adhere to charity law but may still require them to register with the Electoral Commission during an election period. Indeed, during the last General Election a small number of charities did register with the Electoral Commission. Due to the increased awareness and scrutiny of this area we believe that this number may increase, regardless of the change in the scope of activities and limits that this Bill proposes”.
My noble friend Lord Phillips was suggesting that somehow or other the information on this coming from the Charities Commission was out of date. It is important to recall that it does set out the current position, but it is a situation in which PPERA is not changing with regard to the definition. It will not change as a result of this Bill, so the case remains that a narrow scope of activities could be covered. The Electoral Commission is clear that charities should not be exempt from the PPERA regime. It highlights that such an exemption would undermine the effectiveness of the PPERA regime and create incentives for campaigners to carry out as much campaigning activity as possible via charitable channels. Potentially that could have implications for the reputations of the charities.
I repeat what the commission said:
“It is the Commission’s view that it is right that charities are not excluded from within this legislation, and we believe the Government’s approach to distinguish by activity rather than by type of organisations is correct”.
The Government’s view, however, is that the nature of the PPERA test, to which I have referred, and the constraints of charity law will mean that the circumstances in which charities are brought within the scope of PPERA rules will be very rare. First, they must meet the PPERA test where their activities can reasonably be regarded as intended to promote or procure the electoral success of a party or candidate. Secondly, if they meet this test they must incur controlled expenditure over the registration threshold. The amendments that we will debate later and that are being brought forward by the Government to raise the registration threshold in essence will ensure that smaller or even medium-size charities will not have to register with the Electoral Commission.
I heard comments in Committee and in the meetings that I have had about the importance of trying to keep the administrative burden to a minimum. I accept that there was force in the concerns expressed when I first became engaged in this Bill and attended meetings with my noble friend Lord Wallace of Saltaire, in which charities said that there was a possibility that they could do something that took them into PPERA-controlled expenditure, with the limit at £5,000—£2,500 in Scotland, Wales and Northern Ireland. That might happen, without their knowing that there could be a freeze on their activity. But limits of £20,000 for registration are now proposed; in Scotland, Wales and Northern Ireland it is £10,000.
If charities are undertaking that level of expenditure this is neither unreasonable nor the sort of thing that will get lost in the loose change. It is significant expenditure. Therefore many charities will be removed from any concern by the thresholds that we are setting. Those approaching that level of expenditure may wish to consider whether it is appropriate. In terms of the general core principles of accountability and transparency in the Bill, it is important that if a body is undertaking the kind of activity that falls within this scope it should be accountable and transparent. In some of my discussions with the chief executive of OSCR, the Scottish charities regulator, he said that he thought that the transparency argument was important: if two organisations were doing exactly the same thing that brought them within the scope of the Bill or PPERA, it was wrong that one should have to be accountable and transparent, and the other, because it was a registered charity, should not. In transparency and accountability terms, this departed from an objective of the Bill.
Charities have raised concerns as to what happens if a party or a candidate adopts one of their policies. The Electoral Commission guidance is clear on this point. If a party or a candidate adopts a charity’s policy this will not automatically result in the charity incurring controlled expenditure. A charity will incur controlled expenditure only if it subsequently highlights the fact that party A or candidate B supports its policy, or ramps up its campaign. As such, the Government are not persuaded that there is a compelling case to take such a significant step as to exempt charities from the regulatory regime. It is the activities of the third party and not the type of organisation that should be subject to regulation. I can assure my noble friend, who raised the matter, as did other contributors to the debate, that the regulatory regime on charities will be explored during the review of third-party campaigning that we have indicated, as laid out in later amendments, will take place after the 2015 election.
We have had a good debate. I am not sure that I can elaborate these points much further. The noble and learned Lord, Lord Mackay of Clashfern, very properly made the point that the shape of the Bill will not be determined by the Charity Commission or the Electoral Commission; it will be done by Parliament, by your Lordships’ House and the other place. But, in doing so, it is important that we have some regard to those who have dealt with these issues in elections past, and to the Charity Commission and the Electoral Commission, which agree that the amendment proposed by my noble friend would not be appropriate in these circumstances. I therefore invite my noble friend to withdraw it.
(10 years, 11 months ago)
Lords ChamberMy Lords, I am a fan of the noble Lord, Lord Phillips. I have every reason to be grateful to him from when I was running a charity myself, but I cannot support his amendment. I, too, have had words with a great many charities and have been surprised by how many of them are opposed to this amendment and have not taken any comfort from his faith in the Charity Commission doing the excellent job that he appears to think it would do in this regard.
Some of the charities I have spoken to have been opposed to the idea of exemption for personal reasons. For example, the Save Lewisham Hospital Campaign would not have wanted to go through the process of registering as a charity to gain exemption. Those involved were too busy with their campaign. I have spoken to other charities which point out that coalitions are often formed across sectors so that they make up coalitions not only of charities but of social enterprises and, indeed, of commercial organisations. I certainly have had experience of that in my campaigning background. What we have to remember is that the NGO sector, whatever it is, is increasingly diverse. We are constantly coming across different forms of NGO-type organisations. There is a great potential for confusion among the public and supporters. We should focus on the activity being undertaken, not on the type of organisation undertaking it. I understand that some legal opinions have suggested that going for exemption may be a legally unviable option and much too open to challenge. There is also a widely held view that it is unfair to make non-charitable organisations subject to tighter regulation, thus making it more difficult for them to highlight the problems which this legislation is increasingly going to bring about.
We come back to the point that this legislation is being introduced without proper evidence and without proper consultation. As I said at Second Reading, it is very much a sledgehammer Bill to crack what was, at best, a small nut of misbehaviour by some non-charitable lobbying organisations. The noble Lord, Lord Phillips, himself said that it is complex, there is a great deal of bureaucracy and there will be a diversion of philanthropic effort. It puts a disproportionate burden on organisations and is wholly unnecessary. This does not seem to be an argument for exempting charities but for amending the Bill in the way your Lordships are trying to do.
My Lords, I did not speak at Second Reading for the same sort of reasons as the noble Baroness, Lady Tyler, but I will just make three points in support of the amendment. In passing, I have to say that I have the impression that the charity sector does not speak with one voice on this and does not have a monolithic view. Some charities want an exemption while some do not. In those circumstances, I take the view that it is incumbent on one to support what seems the most rational course, which is what I propose to do. I declare up front my interest as a vice-president of the RNIB. I will make my three points quite briefly.
First, as the noble Lord, Lord Phillips, has made clear, charities are already regulated up to the hilt as regards political campaigning and not engaging in it. The noble Lord, Lord Hodgson, has suggested that, because of their special status, which gives them a peculiar responsibility to be beyond reproach, charities should be subject to the regulation which this legislation proposes. However, it seems to me that the validation kitemark, as you might call it, which charity regulation provides is precisely the reason not to load charities with additional regulatory burdens. What would be the point of conferring this special status on charities and then saying that it does not actually count for anything?
Secondly, along with everyone else, I pay my tribute to my noble and right reverend friend Lord Harries and to his Commission on Civil Society and Democratic Engagement, which, as everybody has said, has done such sterling work on the Bill, which will be of great assistance to the House. However, I was not entirely convinced by its argument for not exempting charities. The argument seemed to be that charities should not have an exemption because other people should have one as well—but in that case, it would not be an exemption. The case for charities having an exemption is that they are in a class of their own. As I say, if everybody is to have the exemption, it ceases to be an exemption; if others feel they should have the benefit of charitable exemption, the answer is surely for them to seek to register as a charity. Concerns have apparently also been expressed that an exemption for charities could increase the prospects of a successful challenge to the PPERA rules on freedom of expression grounds, since it will make it more difficult to argue that the restrictions imposed on others by the rules are necessary and proportionate. If that is the case, so be it, and a good thing too. In saying that I am in favour of the charities having exemption, I am in no sense against the others.
The commission chaired by the noble and right reverend Lord, Lord Harries, is concerned about the impact of the Bill on the reputation of and trust in charities and the extra regulatory costs they will face in order to campaign for their charitable objectives, but it does not recommend an exemption. I am afraid that I draw the opposite conclusion. The noble and learned Lord, Lord Hardie, and the noble Baroness, Lady Mallalieu, raised the point that non-charitable campaigners might seek to set up charitable vehicles as a means of avoidance. However, that is surely not a genuine concern because if they set up a charity they would immediately become subject to the controls imposed by charity law. They would not be able to smuggle through, under cover of a charity, things they would not be permitted to do under charity law. There would be no point in setting up a charitable vehicle to get round the Act. Given the strictness of charity law and regulation, it would be completely self-defeating.
Thirdly, the best way I can contribute to this debate is from my experience when I was more active within RNIB than I am now. I was chairman for nine years and in various senior trustee capacities before that, so I have a good deal of experience with a leading campaigning charity. This experience tells me that the desire to impose stricter controls on charities to restrict the scope of party political campaigning is completely misconceived. At election time, we are concerned to promote our views to the parties, not to promote the views of the parties to anyone else. As often as not, we are simply asking the parties about their views, not promoting those views. If I have understood him correctly, the noble and learned Lord, Lord Wallace, said in an earlier debate that this kind of activity would not be caught by the legislation. However, proving that their activities were exempt would tie the charities up in bureaucracy. The noble Lord, Lord Tyler, has shown us this with his graph showing the correlation between bureaucracy and transparency. The noble Lord, Lord Phillips, also made this clear when he described the increased regulatory burden to which charities would become subject as a result of the Bill.
The simplest thing would be to exempt the charities from the legislation.
My Lords, I am very glad that I held back and listened to another contribution from the noble Lord, Lord Low of Dalston, who said many of the things that I would like to have been able to say but could not have done with the same level of experience. There are two points which I would like to add or underline.
First, there seems to be a view in the House this evening, expressed by the noble Baroness, Lady Pitkeathley, that it would, somehow or other, be unfair to exempt the charities because the other organisations would then be more carefully controlled than the charities. That is the whole point: the charities are already very, very carefully controlled in what they can and cannot do in the public space before, during and at election time. As the noble Lord, Lord Low, has said, it may be that CC9 and the further additional requirements of the Charity Commission are not totally adequate but they are certainly very much more so than they were previously. They are certainly more adequate than the guidance that was given to the charities at the time of the passage of PPERA. I am very sorry to see that the noble Lord, Lord Bassam, has left his place, because he was the main author, I think he would probably claim, of that Act. Therefore, its inadequacies, which have been drawn to our attention throughout today—and, I have to say, have been drawn to my attention in the large number of meetings I have held—relate very much to the inadequacy of the treatment of charities, which are already so firmly circumscribed in what they can and cannot do.