Charities

Lord Wallace of Saltaire Excerpts

Wednesday 12th December 2012 Lords Chamber

[Baroness Pitkeathley]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and draw attention to my charitable interests as listed in the register.

[Lord Wallace of Saltaire]

My Lords, the report does suggest a worrying drop in giving. However, this is yet to be confirmed as a trend, and there is some debate within the sector about whether this is what charities are experiencing on the ground. The Government remain committed to taking action to ensure that Britain continues to be a generous country, in giving both money and time.

[Baroness Pitkeathley]

The Minister is right that there is some dispute about the figures, but I wonder whether he is familiar with the latest report by the Charities Aid Foundation that one in six charities think that they will have to close over the next year and that half are already using their reserves because of a fall in donations, cuts in public spending and much increased demand for their services. How do the Government think that this will impact on their vision of the voluntary sector and charities being a vital part of the delivery of public services and, indeed, on the Prime Minister’s hopes for the big society?

[Lord Wallace of Saltaire]

My Lords, I have also seen that report and looked at it in some detail. It is interesting, incidentally, that as of September this year there were 2,000 more charities registered than there had been three years before so the trend has not, so far, been downwards, but it is worrying. From my experience of the charities sector, and I have visited a large number of additional charities since I took over this post, I am shaken by some that I meet in Yorkshire that are almost entirely dependent on public funds. That seems unwise. I strongly approve of those that raise some of their money through their own activities. The social enterprise model is very much part of what charities should be doing. The Government are doing a whole range of things to encourage the new generation to give more of their time and money. The National Citizen Service is one of them.

[Baroness Barker]

My Lords, given that the number of donations being given online and by text is increasing, does the Minister agree that charities are losing out, because gift aid is not yet fully digitised? Does he agree that it is imperative that the Government help charities to achieve a universal declaration of gift aid so that online giving can be much more beneficial than it is now?

[Lord Wallace of Saltaire]

My Lords, I strongly agree with the noble Baroness. We are also looking at the difficulties of payroll giving. The Government want to encourage it. A small number of, by and large, large companies make that easy for their employees. We would like to see an expansion of payroll giving. The figures suggest that older people are now much more generous than the younger generation, and we do not entirely know the reasons. Again, that is not entirely fitting. I trust that all Members of this House are giving at least 10% of their income to charity.

[Lord Grenfell]

My Lords, I spent some years living in the United States. I was always struck there by the efficacy of the system that they have, in which where contributions to charities are fully deductible. The US Treasury seems to have worked out that the more that is given by individuals, the less the eventual burden on the taxpayers because they are taking up a lot of the strain from the taxpayers. This is not rocket science. Successive Governments here never seem to look at this as a serious proposition. Why not?

[Lord Wallace of Saltaire]

I do not entirely agree with the noble Lord, Lord Grenfell. I have a relative in the United States who managed, by making donations of various sorts to his university library, to avoid paying almost any tax the previous year. One wants to encourage people to be generous. The Small Charitable Donations Bill, which we will be dealing with next week, is part of that. We need to consider how one asks for larger donations and makes them tax-beneficial. I remind people that legacies are also important, but a charity which I was talking to last week said that the problem with legacies is that people offer them to you, then stick around for many years.

[Baroness Berridge]

My Lords, have the Government assessed whether the decline in charitable giving is connected to an increasing rise in the practice of charity mugging, commonly called chugging, where members of the public are approached by representatives, who may be working for agencies, to sign a direct debit? In particular why is it that if they are holding a cash tin they need a licence from the local authority, but if they make an approach for a direct debit they do not?

[Lord Wallace of Saltaire]

My Lords, the noble Lord, Lord Hodgson, dealt with chugging in his review of the Charities Act. We wish to encourage a broader base for giving among small donors. Chugging has been with us for some time. It is not a new phenomenon.

[Lord Best]

My Lords, in terms of the giving of time through volunteering, as well as the giving of money, it is good news that the Government are supporting more volunteering for sports as part of the legacy from those wonderful games makers at the Olympics. Will that same support for volunteering be extended beyond just sporting activity to other kinds of volunteering, such as the work that the WRVS is currently doing in sending volunteers in to help people who are living alone and suffering from loneliness?

[Lord Wallace of Saltaire]

My Lords, the Government’s join in scheme is very much intended to take on the spirit of the Olympics and extend it to a whole range of other activities. I visited a National Citizen Service course this summer. I had been relatively sceptical about National Citizen Service until then, but I was completely bowled over by the young people who were taking the course who were learning how to go out, raise money, help people and develop schemes. I would like to see many more people have the opportunity to learn how they can contribute more actively to society. It was a bunch of people from one of the poorer areas of Bradford, and it was delightful to see that they were learning to give their time and were managing to raise money.

[Baroness Uddin]

My Lords, during the noble Lord’s wide-ranging visits to different areas and charitable organisations, what assessment has he made of the impact of the current economic crisis, particularly on BME women’s organisations, given the Government’s commitment to empowering women and those dealing with domestic violence and increased reports of forced marriages and honour-based violence?

[Lord Wallace of Saltaire]

My Lords, what happens to different charities depends partly on how heavily they depend on public funds and what their donor or social enterprise base is. I am aware of several charities in Yorkshire that deal particularly with women. Their current trajectory is very different depending on their funding base.

Public Services

Lord Wallace of Saltaire Excerpts

Wednesday 12th December 2012 Lords Chamber

[Lord Wallace of Saltaire]

My Lords, this has been an excellent debate and I look forward to many more on this theme. I thank the noble Lord, Lord Boateng, enormously for the way he introduced this debate. This is a cross-party and cross-government issue in which we are attempting to go through a major cultural change in the way in which the state, centrally and locally, delivers services in partnership with the voluntary sector, rather than simply as a contractor of it, as a number of noble Lords have said.

I am interested that no noble Lord has cited the new report from Social Enterprise UK, which contains some sharp language which I am sure that the noble Baroness, Lady Royall, would welcome, on the dangers of ending up, through outsourcing, with a private oligopoly of firms that are too big to fail and have a stranglehold on the outsourcing sector. The Government are aware of that, and a great deal of what we are now attempting to do is to make it easier for smaller enterprises and those which do not have the financial reserves and the skills to prepare complex contracts successfully to achieve a relationship with government. The Commissioning Academy is now getting under way, training central officials to simplify the contracting process between government and the voluntary sector, thus advertising small contracts available on government websites to make it easier to find out what is going on.

This is, of course, a long-term development and, in some ways, a revolutionary development. We are now admitting that we have a limited government and that we cannot provide for our society everything that is needed through the state itself.

At a meeting in Paris, I sat between one of my party colleagues in government and a senior French Minister. He was saying, “We share a similar set of problems. We in Britain are spending nearly 45% of our GDP on public services; but you are spending 55% of your GDP on public services”. I thought, “That is a very important gap”. Part of the problem that we all have—the previous Labour Government faced this—is that we have a public who resist paying higher taxes but want better services. That is a problem that is going to get worse in the next 10 to 20 years because our older population is growing. The possibilities of what one can provide in social care and healthcare are rising, so the pressures are intense. We have to find ways of providing a mix of state and voluntary services which can provide the quality that we need.

We hope that we are moving toward real partnership. Even there, I have to say that, as we are accounting for public money, and we are having to contract out public money, the question is how one achieves a balanced partnership where the state is paying and the Daily Mail is looking over the state’s shoulder to see whether it is spending the money properly. That is a relationship that we will have to learn about as we go on.

As we all know—I certainly remember from when I was a politician in Manchester—there is deep suspicion among large local authorities of the volunteer and the amateur. Only the full-time council employee could be trusted to do things. That is part of what we need to change. We also recognise that there is a deep problem in London. A lot of people in London—politicians, journalists and officials—do not really believe that people in Birmingham, Manchester or Leeds can be trusted to do things on their own. Manchester, Birmingham and Leeds are very large local authorities and, in their turn, do not trust some local enterprises which really understand what is happening in parts of Leeds or Bradford to begin to deliver the sort of public services which are needed.

As has been said by several participants in this debate, the voluntary sector is often best when it is small and local. The noble Lord, Lord Mawson, spoke about those teams of local players, and I think that he meant personal relationships. That is fine, but it does not fit the model of state provision of services. We have to find ways around that. The noble Lord, Lord Boateng, and others talked about giving instructions to local government. If we believe in pursuing the localism agenda, we have to encourage local government rather than sending the sort of mass packs of instructions that Governments have tended to do over the past 25 years or more. We have to encourage them to go in for community budgeting—double devolution, which the previous Government and this one have also talked about. We have to recognise that our city local authorities —Birmingham is larger than several European Union member states—have to be encouraged to push things down from the local authority level to the communities below them.

This is a set of challenges for the voluntary sector as well. As the noble Baroness, Lady Stedman-Scott, and others have said, a lot of social enterprises and charities do not have the skills needed to get into these large procurement exercises. The charities I have been involved in lacked accounting and legal skills. We have had to learn by packing the trustees and getting accountants and lawyers to provide their services pro bono. If you are going to be getting into contracting with the Government you need a certain level of contracting skills and that, again, is something which the Government are experimenting with as we try to simplify the contracting process.

Working relations with social entrepreneurs, as the noble Lord, Lord Mawson, knows well, are never going to be easy. The way in which states have to operate does not easily absorb the individualist—the entrepreneur—who wants to do things in an entirely different way. We have to live with that tension and we have to do our best to make it work. Although I recall with some amusement being told that various government departments have wanted to replicate in other cities in England what the noble Lord, Lord Mawson, has achieved in east London. They have worked on this but not quite found the right non-conformist Ministers to lead it. It is again part of the problem with the voluntary sector which requires determined individual leadership.

The Government are pursuing a partnership with the voluntary sector. We are learning as we go forward. We are experimenting, as the noble Baroness, Lady Barker, said, with new forms of financial assistance and support. We are very conscious, for example, that in one or two cases social enterprises have failed in bidding for government contracts because they could not demonstrate that they had the financial reserves to guarantee that they would be able to carry out the contract through a particularly difficult period.

We all hope that the Public Services (Social Value) Act, which is just about to come into operation, will help a great deal although estimating and calculating social value and standing up to the Public Accounts Committee asking you whether your department did deliver social value may not entirely be an easy thing to do. I am also engaged through the Cabinet Office in Civil Service reform. Getting officials out of their offices and changing the ways they think about the sort of services they are delivering again is part of this whole process. The voluntary sector, in turn, also has to adjust.

I was fascinated to hear the noble Baroness, Lady Barker, talk about a period of turbulence. In political science there is the phrase “creative destruction”. I fear that what she is suggesting is that some charities will fail to make the grade and others will come into greater prominence. However, when one looks at the figures of turnover in the number of charities registered with the Charities Commission one realises that this is a continuing process. Charities die; other charities come into effect.

The noble Lord, Lord Best, said something extremely interesting about housing associations. A couple of weeks ago a good friend of mine who has just retired from a big housing association was making almost exactly those points. Housing associations have the funds, the presence and the weight to be able to do a lot of things that smaller and more fragile bodies cannot. I think that is a model we all need to take on board. Housing associations can actually do broader things within the local communities of which they of course form a part.

We are learning as we go along. The Government and the voluntary sector know that this is a long journey. We will be publishing tomorrow a new document about making it easier for civil society organisations to do business with the state. I think it will address some of the issues that the noble Baroness, Lady Tyler, raised in her speech. This is of course part of a process whereby we hope to be building a better and easier relationship with the voluntary sector. It would be much easier if the economy were growing at 2% to 3% a year but, in the circumstances where the economy is not growing, we all hope that in two or three years’ time that will be the case. Our aim should be a plurality of social enterprises, charities and others working with local government and with agencies of national government to deliver the quality of services which we need in an increasingly difficult environment, with an older and more diverse society. That society will be coping with a very large range of different challenges.

House adjourned at 9.10 pm.

Georgia

Lord Wallace of Saltaire Excerpts

Tuesday 11th December 2012 Lords Chamber

[Lord Wallace of Saltaire]

My Lords, following broadly free and fair parliamentary elections on 1 October, Georgia is now negotiating a tricky period, with a difficult cohabitation between the Government and the President. It is incumbent on all sides to work together to consolidate Georgia’s democratic progress. This message was delivered by my right honourable friend the Minister for Europe, David Lidington, on his recent visit to Georgia on 21 to 22 November.

[Lord Harries of Pentregarth]

I thank the Minister for his reply, but does he agree that there are very worrying signs coming from Georgia? More than 20 members of the previous Government have been arrested, including many high-ranking officials, former Cabinet Ministers, the deputy mayor of Tbilisi and the chief of the defence staff. It may be that some of those are guilty of misconduct, but will the Government join with other members of the European Union to make it quite clear to the new Prime Minister that the due process of law must be followed in every case and that there should be no hint of what has already been termed political retribution against former members of the Government?

[Lord Wallace of Saltaire]

My Lords, we are concerned about the number of political figures who have been arrested and we are following that situation very closely. The sentiments that the noble Lord suggested have been expressed by a number of foreign ambassadors and Foreign Ministers. There have been discussions with the Georgians in Brussels. Ivanishvili, the new Prime Minister, visited Brussels in the context of the NATO-Georgia council on 5 December. An active dialogue is therefore under way.

[Lord Haworth]

My Lords, Georgia is a sovereign, democratic and proud country, but is it not the case that recent events are staining its reputation for democratic development? Is not the Georgian Dream becoming the Georgian nightmare? Will the Minister comment on the cancellation of Prime Minister Ivanishvili’s visit to Washington? Some reports say that while his party is busy arresting and harassing opposition parliamentarians that should remain the case. Would he be welcome in this country while this situation continues?

[Lord Wallace of Saltaire]

My Lords, it is a little too early to be quite as definite as the noble Lord has been. This is a new Government who have been in office for, in effect, less than two months, and the Georgian Dream coalition is extremely diverse. It is led by the richest man in Georgia, who has very little previous political experience. It is finding its way. Georgia is the most democratic among the former CIS states. It is not by any means a perfect democracy, but one has to recognise that the elections were seen as being broadly free and fair, and there was a democratic change of Government. We have to cling to that and bring all the pressure we can to make sure that the new Government fulfil their full democratic obligations.

[The Lord Bishop of Wakefield]

My Lords, perhaps I may move the focus to Russo-Georgian relations. Prime Minister Ivanishvili made most of his millions in Russia and it is reported that he either has been, or is about to be meeting President Putin. Will the Minister comment on the Government’s informed understanding of how Russo-Georgian relations may alter or whether they will remain as they are?

[Lord Wallace of Saltaire]

My Lords, we would welcome an improvement in relations between Russia and Georgia. The new Government have indeed attempted to open a new dialogue with the Russians, but so far, as far as I am informed, the Russians have not responded very favourably. The problems of Abkhazia and South Ossetia remain; Russia still does not accept the territorial integrity of Georgia. There is a long way to go, but in the context of the multinational Geneva talks in which Britain also plays a part, we would very much like a more positive dialogue between Russia and Georgia to take place.

[Lord Dykes]

My Lords—

--- Later in debate ---

[Lord Hannay of Chiswick]

I have asked a question.

[Lord Wallace of Saltaire]

I thank the noble Lord for those comments. The previous Government were not perfect. There is a very large prison population in Georgia and prison conditions were clearly awful. The current Government are not perfect either; media freedom is still very limited, but we have to do what we can to encourage a process of transition to full democracy, which is still under way.

[Lord Dykes]

Is my noble friend confident that the October 2010 constitutional measures will ensure greater accountability and duty by the president to avoid the Putin-Medvedev interchangeability that is such a feature of Russian politics?

[Lord Wallace of Saltaire]

My Lords, one of the worrying concerns has been that the Government have published a proposed series of cuts in the budget that would sharply cut the budget for the presidential administration. We are doing everything that we can, as are a number of other foreign Governments, to encourage a constructive cohabitation between the president and the current Government until the presidential elections next year.

Electoral Registration Data Schemes (No. 2) Order 2012

Lord Wallace of Saltaire Excerpts

Monday 3rd December 2012 Lords Chamber

Moved By

[Lord Wallace of Saltaire]

That the draft Orders and Regulations laid before the House on 30 October be approved.

Relevant documents: 10th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 27 November

Motions agreed.

Israel and Palestine: Balfour Declaration

Lord Wallace of Saltaire Excerpts

Wednesday 28th November 2012 Lords Chamber

[Baroness Tonge]

To ask Her Majesty’s Government how they marked the 95th anniversary of the Balfour Declaration; and what is their current assessment of the welfare of Israelis and Palestinians.

[Lord Wallace of Saltaire]

My Lords, I should perhaps explain that the noble Baroness, Lady Warsi, was taken unwell this morning and I am therefore standing in her stead at short notice. The British Government have not organised any events to mark the 95th anniversary of the Balfour Declaration. However, the Attorney-General and the British ambassador in Tel Aviv attended a dinner event on 12 November in Tel Aviv, organised by the Israel, British and the Commonwealth Association. We were deeply concerned about the welfare of both the Israelis and the Palestinians during the recent Gaza conflict. That violence only reinforces the need for urgent progress towards achieving a two-state solution to secure the long-term welfare and security of both Israelis and Palestinians.

[Baroness Tonge]

My Lords, I thank the Minister for that Answer. Is he aware that the Palestinians feel totally betrayed by successive British Governments since the Balfour Declaration? By making our Government’s support for tomorrow’s United Nations bid conditional on Palestine not pursuing Israel through the International Criminal Court, are the Government not admitting that Israel has committed war crimes in Gaza and the West Bank and that they are seeking impunity for that country?

[Lord Wallace of Saltaire]

My Lords, the Government are concerned, as far as is possible in an extremely difficult situation, to restart the process towards negotiations on a two-state solution. We recognise that this is becoming increasingly difficult; the Foreign Secretary said in his Statement in the other place only a couple of hours ago that time is running out and if we do not manage to achieve a two-state solution within the next year or two, we may find ourselves looking at some very unpalatable alternatives. That is what the Government are fixed on.

[Lord Turnberg]

My Lords, it is easy for supporters of Israel or the Palestinians to criticise the other side, so I will not trade missiles with the noble Baroness, Lady Tonge. Does not the noble Lord agree, however, that the important objective now is to look forward and bring the two sides to the negotiating table, and that efforts by the Palestinian Authority to gain recognition at the UN are more of a distraction than a help?

[Lord Wallace of Saltaire]

My Lords, it is very important to give some support to the Palestinian Authority. If Israeli illegal settlements continue to expand, the position of the Palestinian Authority will become impossible. Therefore, although we have done our best as a Government to dissuade the Palestinian Authority from taking this resolution to the UN General Assembly at this point, we understand why it feels it necessary to do so.

[Lord Wright of Richmond]

My Lords, does the Minister agree that the anniversary of the Balfour Declaration makes this an appropriate moment to recall the understanding in Mr Balfour’s letter to Lord Rothschild that,

“nothing shall be done which may prejudice the civil and religious rights of existing non-Jewish communities in Palestine”—

a tragic contrast to the continuing breach of Palestinian human rights caused by illegal settlements on the West Bank and by ethnic cleansing in east Jerusalem? Does the Minister also accept that, given the almost unanimous consensus to which he has himself referred, a two-state solution is the only way to resolve this long-running dispute in the interests of both Israel and Palestine? It is entirely logical and right that we should not only give unconditional support to the very modest Palestinian hopes for enhanced membership of the United Nations but encourage our friends and partners to do likewise. Finally, I understand that the Foreign Secretary made a Statement in the House of Commons this morning on this subject. I express some regret that it was not thought appropriate to repeat it here this afternoon.

[Lord Wallace of Saltaire]

My Lords, I reread the Balfour Declaration before I came in and it is a masterpiece of diplomatic drafting. It is not entirely clear and has a number of deliberate ambiguities within it. Her Majesty’s Government are very concerned to bring pressure to bear on all those who have a stake in the negotiations, including the Governments of Israel and the United States, to exert all their efforts now to restart the negotiations. I stress again that time is not entirely with us. We wish to avoid a situation in which opinion in the US Congress, or perhaps right-wing opinion in Israel in an election campaign, might lead to a demand for retaliation for recognition of Palestinian statehood. We are therefore doing our best to promote the two sides being brought together rather than have them score points against each other.

[The Lord Bishop of Exeter]

My Lords, does the Minister not recognise that, in the interests of peace in the Middle East, Palestinians need to be supported in finding legitimate, non-violent alternatives to the rockets that have been raining in from Hamas on southern Israel? Does he not see that tomorrow’s seeking of some formal recognition falls into that category? Does he not recognise that, if we are not to see Palestinians sign up to a cause to die for, we have to give them hope to live for?

--- Later in debate ---

[Lord Wallace of Saltaire]

My Lords, we entirely understand that. We have been in active discussion with the Palestinian Authority and with other Governments over the past week about the exact text of the resolution and we are continuing those discussions. If we gain from the Palestinians the assurances that we are looking for, we will be able to vote in favour of the resolution.

[Lord Triesman]

My Lords, the argument for a two-state solution is one with which we are in entire agreement and continue to be so. We have also urged, and continue to urge, both sides to behave with legality, because that is a precondition for any kind of stability in the region. However, does the Minister agree that, in order to change what is going on and achieve an enhanced status for the Palestinian people, support at this time would be a very valuable step? Does he also agree that it is extremely unlikely that it would set back any part of the peace process—an argument that has been advanced in this House and which, candidly, few of us understand?

[Lord Wallace of Saltaire]

My Lords, we are providing very active support. My honourable friend Alistair Burt was in Gaza and the Middle East last week and we are providing a great deal of financial support both in Gaza and in the West Bank.

[Baroness Falkner of Margravine]

Given that the vote at the United Nations is merely symbolic and observer status, exactly like that of the Holy See—the Vatican—should not threaten anyone, will Her Majesty’s Government have conversations with the Americans to remind them of their obligations under the Oslo accords? One of three preconditions from Oslo was that the Americans had to engage positively and proactively in bringing out a two-stage solution.

[Lord Wallace of Saltaire]

My Lords, my noble friend knows the complexities of American politics as well as I do, and knows that the United States is in a very different position in terms of congressional politics from us in either of the two Houses here. We have actively to engage with the United States to get it to turn back and towards negotiating a peace process.

EU: Scottish Independence

Lord Wallace of Saltaire Excerpts

Wednesday 28th November 2012 Lords Chamber

[Baroness Liddell of Coatdyke]

To ask Her Majesty’s Government what advice they have received on the consequences for the European Union membership of the remainder of the United Kingdom should Scotland secede.

[Lord Wallace of Saltaire]

My Lords, the UK Government have already confirmed that they hold legal advice on this issue. The overwhelming weight of international precedent suggests that, in the event of Scottish independence, the remainder of the UK would continue to exercise the existing UK’s international rights and obligations and that an independent Scotland would constitute a new state. The UK Government judge that this situation will be recognised by the wider international community.

[Baroness Liddell of Coatdyke]

I thank the Minister for that Answer. However, in view of the events over the weekend in Catalonia, it is inconceivable that the European Commission would not be looking at the consequences for member states of the secession of one member state. In Scotland we have had enormous difficulty getting straight answers as to what the consequences will be for the citizens, so we need every citizen of this country to be confident that we have genuine advice and information on what will happen. Will the Government consider the establishment of an expert panel to look at the issues around the separation of Scotland from the rest of the UK to make sure that all British citizens do not suffer as a consequence of the break-up of Britain?

[Lord Wallace of Saltaire]

My Lords, my noble and learned friend and colleague—and perhaps even noble kinsman—the Advocate General for Scotland has a legal forum, which met last Friday, which is considering these issues. In the course of 2013 the UK Government will publish a number of studies on some of the issues engaged. On the question of Catalonia and Spain, it is entirely clear that the Spanish Government are opposed to any idea of secession and would be likely to veto a Scottish application to join the European Union under current circumstances. There have been exchanges between the Spanish Government and the European Commission on this exact issue.

[Lord Steel of Aikwood]

My Lords, does my noble friend agree that it would be quite a tall order for an independent Scotland to seek to negotiate opt-outs of both the eurozone and the Schengen agreement? While I am always very keen to see employment in the Scottish Borders, border posts were not something I ever had in mind.

[Lord Wallace of Saltaire]

It opens up all sorts of questions about the future of Gretna Green. There would also be a number of questions about Scotland having to negotiate for fishery quotas and for the financial contributions that Scotland would wish to make. Those who argue that it is Scotland’s oil would recognise, perhaps, that it would also be Scotland’s financial contribution.

[Lord Foulkes of Cumnock]

My Lords, will the Minister confirm that the corollary of his first answer—that the rest of the United Kingdom would inherit the current UK membership of the European Union and that Scotland would have to apply separately for new membership—is that Scotland would then go to the back of the queue behind Croatia, Turkey and all the other countries that are seeking membership? It would have to satisfy, in its own right, all the acquis and conditions of membership. It could take many, many years and that is yet one more really good reason why Scotland is better off as part of the United Kingdom.

[Lord Wallace of Saltaire]

My Lords, there is not an orderly queue for EU membership. There is a list of criteria for EU membership which applicant countries have to fulfil. Turkey applied during the 1980s, rather ahead of some of those countries that have since joined. Of course, Scotland would have to meet a whole range of criteria and there would be, no doubt, some careful and detailed negotiations. Whether or not Scotland would be allowed—as the noble Lord, Lord Steel, has already posed—to opt out of Schengen or to opt out of the euro and keep the pound is something we would have to consider.

[The Duke of Montrose]

My Lords, does my noble friend agree that, if Scotland is separated from the United Kingdom, the contribution the UK makes to Europe will be reduced and that any rebate that is payable to the UK at the moment would also be reduced?

[Lord Wallace of Saltaire]

That is a question that Her Majesty’s Government have not entirely considered yet, since we have every confidence that when it comes to a referendum the people of Scotland will vote to stay in the United Kingdom. The question of the rebate and of the United Kingdom’s financial contribution is, as Members may have noted, itself under negotiation.

[Lord Soley]

My Lords, do the Government also realise that it is not just Spain that is concerned about the break-up of the country, but a whole range of other countries, including France with regard to Corsica? Automatic admission as the consequence of the disintegration of an individual state would not be looked at happily by the European Union. My noble friend Lady Liddell made a very important point when she spoke about the importance of informing the Scottish electorate of the consequences of a division that might not be recognised by the European Union and also, if it was recognised, could still result in major differences in what it opted out of, in the way that the noble Lord, Lord Steel, mentioned. It is a profoundly important issue, not just for the rest of the United Kingdom but for the Scottish people.

[Lord Wallace of Saltaire]

My Lords, I can confirm all of that. It is a recognised, long established principle of public international law that when a part of a state secedes it inherits obligations under treaties but it has to apply to join international organisations. When the Soviet Union broke up, that applied to Ukraine, Belarus and others. When India broke up, it applied to Pakistan and then to Bangladesh, so this is a well established principle.

[Lord Cormack]

My Lords, do we know yet precisely what legal advice the Scottish Government took on this issue?

[Lord Wallace of Saltaire]

My Lords, we do not know. That is one of the things that everyone is longing to discover.

[Lord Low of Dalston]

My Lords, would the UK have a veto on a Scottish application for membership such as General de Gaulle exercised in respect of British membership in former times?

[Lord Wallace of Saltaire]

My Lords, we are all mongrels. My father was a Scot; there are many of us here who have mixed Scottish, English, Irish and Welsh antecedents so we all hope that this question will not come up. If it did ever lead to separation, we would, of course, have to consider it. The Irish Free State seceded from the United Kingdom in 1922. Incidentally, that was relatively peaceful—although not within Ireland itself—and Ireland had to reapply to join international organisations.

Electoral Registration Data Schemes (No. 2) Order 2012

Lord Wallace of Saltaire Excerpts

Tuesday 27th November 2012 Grand Committee

Moved by

[Lord Wallace of Saltaire]

That the Grand Committee do report to the House that it has considered the Electoral Registration Data Schemes (No. 2) Order 2012.

Relevant Documents: 10th Report from the Joint Committee on Statutory Instruments

[Lord Wallace of Saltaire]

My Lords, The order will provide the legal basis for a further electoral registration data-matching trial, by enabling the sharing of specified data between several data-holding public authorities and some 22 local authority electoral registration officers. The work that we plan to do under this order will form a significant part of our planning for the implementation of individual electoral registration.

The Committee will be aware that this is the third draft order of its kind since the summer of last year. It may be helpful if I were briefly to recap the story so far, before I go into detail about what the present order will do.

The first order—the Electoral Registration Data Schemes Order 2011—allowed us to carry out a set of data-matching schemes and evaluate the results. In those schemes, we were trying to find out whether matching their registers against public authority databases would help electoral registration officers to find potential electors who were missing from the register, so that they could contact those people and invite them to register. We were also trying to find out whether data matching would help registration officers to find entries on their registers that might be inaccurate or fraudulent, so that they could investigate them and then, if necessary, take steps to remove them.

We learnt a lot from those first schemes about the challenges of data matching and about the techniques and the technology that we would need to put in place if we were to do data matching more effectively and on a larger scale. When the schemes were over, the evaluations told us that more piloting work would be needed if we were to ascertain the potential of data matching, and data mining, for finding potential electors who are missing from the register.

What last year’s schemes did reveal, however—rather unexpectedly, it is fair to say—was that data matching might give us a way of confirming the majority of existing electors on the register in the transition to individual registration. If that turned out to be correct, most of the electorate would not have to register individually as soon as individual registration is introduced. That would be more convenient for electors; and for electoral registration officers. There would be significant savings in time and money which would enable EROs to concentrate on those whose details could not be matched and those who were missing from the register altogether.

We needed to test our understanding, however, and we needed to do it quickly so that, if this was shown to work, the necessary systems could be put in place in time for the transition. The second order—the Electoral Registration Data Schemes Order 2012—approved by the House in the summer, was sought mainly to enable that testing, and the schemes for confirming existing electors are now in progress. That order also allows us to carry out further testing of data matching for finding missing potential electors and inaccurate or fraudulent entries; but only in the areas specified in the order, and only using data held by the Department for Work and Pensions. But I told the Committee in the summer that if we decided to extend the schemes to include further areas or data sets, a separate order would be laid before your Lordships at a later date. We are now ready to do that further testing, hence the order now before the Committee.

This latest order will allow EROs in the areas listed to compare their registers against specified public authority data sets. The public authorities which have agreed to make their data available for these schemes are the Department for Work and Pensions, for areas that were not included in the previous order; the Department for Education or, for schemes in Wales, the Welsh Government; the Student Loans Company; and Royal Mail Group. The schemes will target three particular groups where there are high levels of under-registration: people who have recently moved home; young people of 16 to 18 years of age who are just going on to the register; and students. They will complement a programme of work that the Cabinet Office has in hand to maximise electoral registration among groups identified as currently under-registered and at risk of falling off the register during the transition to individual registration.

The main purpose of the schemes will be to see how far data-matching helps EROs to improve the accuracy and completeness of the register by finding people who are missing from the register and finding entries on the register that should not be there. The schemes will also help us to design, develop and test the technology that we will need if data-matching is to play a significant part in future arrangements for electoral registration.

In addition, the order will enable EROs in four lower-tier authorities in two-tier local government areas to match their registers against education data held by their county council, to see whether it helps them to find 16 to 18 year-olds who are not yet registered. Registration officers in unitary authorities already have access to such data because it is held by the same authority that appointed them, but their counterparts in two-tier areas have no right to access the same kind of data if it is held by a different council. The results of these schemes will help us to decide whether it would be worthwhile to legislate to correct this anomaly.

The order will also enable us to augment the work that is already being done on confirming existing electors, by allowing us to carry out a statistical analysis to find out how far other public authority data sets might add to the match rate obtained from DWP data. The Higher Education Funding Council for England has agreed to make its data available for this purpose alone.

As in previous instruments of this kind, the draft order requires that before any data can be transferred, a written agreement must be in place between the ERO and the data-holding public authority setting out the requirements for the processing, transfer, storage and destruction of the data. It sets 17 July 2013 as the date by which each of the schemes must have been evaluated by the Electoral Commission. I also assure the Committee that after the pilots have ended and the evaluation is complete, the data created and held for the purposes of the pilot schemes will be securely destroyed.

The Information Commissioner’s office has been consulted on this draft order. The office has welcomed the fact that the current phase of pilot schemes has identified a much narrower range of data, and that the schemes will inform the extent to which personal data to be collected from electors can be minimised. I hope that the Committee will recognise the value of this further work for improving the accuracy and the completeness of our electoral registers.

I would like to make some additional points which I hope will help the Committee. All of this feeds into the wider context of digital transformation and the development of what in the trade is called “identity assurance”. This morning, I had a useful briefing from the government digital service on exactly this matter. Further down the road, there are delicate issues about the balance between the use of public and private databases, to which we will want to return in that wider context. I reiterate that the current electoral register has deteriorated quite badly over the last 25 years —especially in its coverage of vulnerable groups. We are very conscious of that and are therefore strongly committed to this move toward individual electoral registration and to using this transformation to maximise the accuracy and completeness of the electoral register. I hope that the Committee will accordingly approve this order.

[Lord Rennard]

These orders are clearly welcome to me, as they show potential ways forward for increasing voter registration and improving the accuracy of the electoral register. It seems to me, however, that further pilots are clearly needed, because earlier pilots were certainly not considered to have been a complete success. The Electoral Commission raised serious concerns about the reliability of the earlier pilots because they had,

“an absence of a clear, common, methodological framework”.

This, it said,

“had a significant impact on our ability to draw clear conclusions about the effectiveness of data matching as a tool for maintaining the accuracy and completeness of the electoral registers”.

The Electoral Commission has raised a number of concerns about this next set of pilots, of which, I am sure, the Minister will be aware. In particular, will he tell us how closely the IT systems to be used in these pilots will match the IT systems being developed for eventual use in implementing individual electoral registration? It is clear that they are not the same systems, as the eventual IT systems to be used are not yet ready. Does he therefore accept that there is a significant element of risk in making an assessment of these pilots and drawing conclusions about the effectiveness of the IT systems that will eventually be used?

The commission raised a number of concerns about the methodological framework for the pilots. I am sure that the Minister will assure us that the Cabinet Office will do its best to address them. He has told us that the commission will evaluate these pilots by 17 July 2013. It seems to me that the crucial issues of the completeness and accuracy of the electoral registers will depend on the relative success or failure of approaches being taken in these pilots and other measures which are yet to be announced. It certainly will not be before these pilots can be evaluated that we will know whether a register based exclusively on individual electoral registration will be fit for purpose. That is why the existing Bill must provide for Parliament to decide whether the process has been sufficiently successful for our elections and for future boundary reviews to rely exclusively on it; just as Parliament will also have to approve any decision to abandon the annual canvass.

When the Minister responds, I hope that he will provide some clarity to the Committee about when the Bill will come back and we can debate further the issue of when it may be considered safe to rely exclusively on an electoral register based on IER. In the mean time, we have to hope that the transition will be as successful as possible, as quickly as possible, in terms of the stated aims of improving the completeness, as well as the accuracy, of the electoral register. It seems to me that these aims are best served by testing as many potentially relevant databases as possible. Use of the DWP database will help to ensure that, for example, people who are retired will be registered. The DWP is clearly happy for its database to be used in that way.

However, I understand that the Department for Transport has not given permission for its database at the DVLA to be used in a similar fashion. Both databases are national, government databases and both, of course, will have significant levels of inaccuracy. Surely, it would be better to use them both rather than just one of them. Perhaps the Minister will explain if the DVLA database will be used in due course. It would be very disappointing and quite unacceptable if the Government, having been asked repeatedly to use the DVLA records, were to argue in the future that the fact that there had been no pilots with the DVLA data was the reason for not using the DVLA database for the final process of transition to IER. The DVLA holds data on millions of adults, which is reasonably up to date, because it is a legal requirement to notify the agency if you move.

I very much welcome the addition to the list of databases secondary schools and academies, the Higher Education Funding Council for England, the Student Loans Company and the Royal Mail Group. The presence of educational institutions makes particular sense when it comes to adding so-called “attainers”; that is, young people who are coming up to voting age. I hope that the presence of those institutions in this list is an early sign that the Government will accept that the use of secondary schools’ pupil information must be integral to the IER regime, as it is in Northern Ireland.

It seems to me that in this respect we have at least had a four-year pilot in Northern Ireland. My understanding is that it has been very successful in engaging with 16 and 17 year-olds to add them to the register. We learnt today from the report of the Electoral Commission on registration in Northern Ireland that it was probably unwise to abandon the annual canvass there.

--- Later in debate ---

[Baroness Hayter of Kentish Town]

My Lords, I thank the Minister for introducing the order. It is very difficult to disagree with one word said either by the noble Lord, Lord Rennard, or my noble friend Lord Maxton. I have no shame in using the expression “ID card”, and the Minister is no doubt ruing the day when the Government decided that they did not want to continue with that scheme.

We warmly welcome the measure in broad terms; it is necessary, whether or not the ERA finally goes through. We hope that the process will happen in any case, because it is about finding those who have a right to be on the electoral register but are not there at the moment. It may be that it should have started earlier, but we welcome it all the same.

We have just a few questions. First, as I asked on the previous occasion, has there been any discussion with the political parties about the pilots? As I have said before, and as the evidence we have heard today from the noble Lord, Lord Rennard, shows, political parties understand these issues really well and it would have been good if they had been involved in discussions on the pilots to make them as good as possible.

Secondly, like the noble Lord, Lord Rennard, we have a slight lack of confidence in whether the methodology is sufficiently robust. It looks slightly hit-and-miss, with various areas choosing which bits they would like to do. I hope that it is a little more scientific than that, which it needs to be if the conclusions are to be robust. Perhaps the Minister could assure us that the methodology is sufficiently robust to enable lessons to be learnt and that a sufficient number of authorities are participating for any general conclusions to be drawn. I had not thought of the issue of computer-matching which the noble Lord, Lord Rennard, raised, but, even without that added dimension, we need to be sure that the range is broad enough for us to be able gain good evidence.

Thirdly—this is again related in part to what the noble Lord, Lord Rennard, said—to whom will the Electoral Commission report on its evaluation? Is it only to be to Ministers or will it be to the House? What happens if the pilots prove either too expensive per new elector identified or if, as has been suggested, database problems seem insurmountable? What happens if unforeseen data-confidentiality issues arise, or if some other weakness is identified? Is there a plan B to locate unregistered voters?

Fourthly, it is essential, as the Government’s own Explanatory Notes suggest, that the 22 areas have sufficient expertise and staffing to make the pilots meaningful. What assurance can the Minister give us that they will be sufficiently resourced?

Fifthly, what lessons have the Government learnt from the pitiful turnout for the recent police and crime commissioner elections? Can the Minister assure us that these pilots are not displacement therapy for the embarrassment caused by those unnecessary elections? In case he needs reminding, the elections cost £100 million, which would have paid for 3,000 police officers. It would be interesting to hear whether he thinks that at least some good has come out of those elections in terms of lessons for systems of electoral registration.

The Minister might also like to take the opportunity to say a little more about the Electoral Commission’s report on continuous electoral registration in Northern Ireland—to which the noble Lord, Lord Rennard, referred—which was published today. According to the commission, the report,

“provides clear lessons for Great Britain as we move to individual electoral registration”.

Electors in Northern Ireland are now only registered once and only have to re-register if their personal details change.

This new report assesses the effectiveness of such continuous registration in Northern Ireland. It shows that the electoral register is now only 71% complete and 78% accurate, whereas the previous assessment in 2008 estimated the register to be 83% complete and 94% accurate. It appears that this significant and worrying decline is because the processes used to manage the register are unable to keep pace with people moving home or people becoming newly eligible to join the register.

We will obviously return to this in due course, with suitable amendments to the Electoral Registration and Administration Bill. Again, as has already been mentioned, the Minister will recall that we spoke of our deep concern about the provision in the ERA Bill for the annual canvass to be abolished. We trust the Government will reassess this provision in the light of the Northern Ireland example. Hitherto, the Minister has called Northern Ireland in aid as a defence for the Bill, but I think today’s findings are a little worrying—particularly about people moving, because within certain parts of Great Britain, our population mobility is even higher than in Northern Ireland. Therefore, this continuous updating would be particularly important. However, none of this undermines the general support for these plans to take place.

[Lord Wallace of Saltaire]

I thank noble Lords for their comments. We are a small group, but it is very good to have an expert and interested group in this extremely important and difficult transition from a very elderly system of household registration to a necessary, but not entirely easy, system of individual electoral registration.

I will try to answer some of the questions that have been raised. The government digital service is working actively on IT systems and the compatibility between one system and another. I was amused this morning to have a government digital service team arrive with a Mac presentation that they wanted to put on the House of Lords Microsoft-based video system. They are well aware of these problems; there will be full end-to-end testing of the IER digital service before the introduction of IER. This is not necessary for the purpose of the data pilots, but from the briefing that I have so far had from the government digital service, this is very much one of the things that they are actively working on and are confident that they are making progress in resolving. As I commented to the noble Lord, Lord Maxton, earlier, I was struck by the different cultures of the government digital service and the House of Lords; we had forced two members of the government digital service to put on ties and suits to come to the House of Lords this morning and they felt extremely uncomfortable in this unusual clothing. We intend to be able to integrate IT systems at the local level and a considerable amount of work is under way.

I have been asked by several noble Lords to provide more clarity on when the Bill will come back. I can, with great assurance, tell them that the answer is “soon” and that I look forward to a more precise explanation of when soon will be, since that will also assist my diary.

I was asked about the role of the Electoral Commission and whether its report would be published. The report will be made to the Secretary of State, but in the nature of the relationship between the independent body, Parliament and government, it will of course also be published.

On the question of the Department for Transport and the DVLA, the latter’s database was used for the original data-matching pilots but is not currently available to us. Discussions are vigorously under way between the Cabinet Office and the Department for Transport, and we hope that we will regain access to the database at a later date. I am well aware that the DVLA database, as the noble Lord, Lord Maxton, commented, is accessed by other agencies including private insurance companies. It is not an entirely closed system and we very much hope that we will be able to resolve the issue.

[Lord Tyler]

On the point about the DVLA, I wonder whether my noble friend would accept that the Committee would like to strengthen his arm in any discussions with the Department for Transport and the DVLA. It is extremely important that the Cabinet Office recognises that the priority must be people who are not sufficiently well attended to in the registration process. As he said, the current register is deteriorating fast, particularly for those who are young and mobile in the inner cities. The priority must be to go to those databases that tend to pick out those individuals. Clearly the DVLA is one of them, but so, too, are the tenancy deposit scheme and the credit agency schemes. I hope that the Minister and his colleagues in the Cabinet Office will accept that those must be the priorities. There is a democratic deficit among young people in inner cities, who are the most mobile part of the population. It is natural that they should be the priority, and that is where we should put most emphasis. I hope that the Minister will take back from the Committee’s proceedings that we would like to strengthen his arm, and those of his colleagues, in dealing with the Department for Transport and the DVLA.

[Lord Wallace of Saltaire]

I am very happy to take that back. I will report back to my colleagues on the strongly held sentiments. Perhaps I may take the questions about tenancy and deposit schemes and credit agencies at the same time. The initial assessment by the Cabinet Office of the suggestion from my noble friend Lady Berridge that tenancy deposit schemes might be used was that it was not sufficiently obvious that the processes of these databases could be adapted to support IER. However, that does not exclude renewed consideration.

Of course, the question of credit agencies takes us over the boundary between public and private. Credit agencies are part of the private sector. The issue is part of a broader discussion that we all need to have with the likes of the noble Lord, Lord Maxton, and others, about the extent to which, as we move into a new world of data transmission and availability, private and public databases can be used for identity assurance. That was the basis for the briefing I received this morning from the government digital service. It would be helpful to organise a meeting for Peers as a whole on the work that it is doing—for longer-term and wider purposes than this Bill alone—on these issues. Private databases are increasingly useful, but their use raises questions about civil liberties and public and private interests with which we need to be concerned.

[Lord Rennard]

The Minister suggested that there was a great gap between private sector credit reference agency databases and public sector databases. Would he not accept that private sector databases used by credit reference agencies are already used extensively by public local authorities? Many local authorities use data held by credit reference agencies to determine whether there may be more than one person living in a household, in particular when someone is claiming a single person’s council tax discount. Credit reference agencies may have information suggesting that more people are present in the house, and revealing who they are. Local authorities, which are public sector organisations, are already using the data from private sector credit reference agencies. Would it not be logical for electoral registration officers to do what their colleagues in finance departments are doing to identify the existence of people who are there but who are not on the electoral register, and invite them to be on the electoral register? I am not aware of any objections from civil liberties groups to any of these existing practices.

[Lord Wallace of Saltaire]

I thank my noble friend for that strongly worded intervention. I take that on board as one of the issues that we are edging towards. The civil liberties lobby may not have caught up yet with the point that he is making, but I expect that it will do so soon. There are some very broad issues here that we have to be concerned about. I point out, as he has done, that one of the principles of our system of electoral registration is that it is in the hands of local authorities. We do not have a central database, so what one local authority does with credit agencies may be rather different from other local authorities do.

On the question of why this particular collection of local authorities was chosen, the answer is that these are the ones that volunteered to take part. They seem to us to be relatively representative, but this is the nature of the system under our current legal arrangements. Happily, the selection of local authorities is sufficiently wide that we and the Electoral Commission are persuaded that they will provide us with sufficiently reliable information.

[Baroness Hayter of Kentish Town]

Is the Minister concerned that they are, in a sense, good local authorities? The fact is that if they volunteer to do this they are probably doing quite a lot in any event, and therefore probably not the ones that are of concern to us. I was very glad that they volunteered, by the way.

[Lord Wallace of Saltaire]

As I have discovered, the world of electoral registration officers and their staff is a wonderful subculture of its own. They interrelate across the board, and they know which are the good local authorities and which are not. I am less worried than I was when I started in this process after having discovered this wonderful population of people, for whom I have a great deal of respect, having been briefed by a number of them.

My noble friend Lord Rennard asked me for an assurance that the databases chosen are properly representative of the UK population. We are pursuing the greatest diversity possible in databases, which is why I take on board what has been said about the DVLA; the wider the collection of databases that we use, the more likely it is that we will catch students, attainers, rapid house-movers and others. That is precisely what we are trying to do.

The noble Lord, Lord Maxton, made an interesting comment that he might perhaps wish to pursue further: he would like an opt-out electoral registration system rather than an opt-in one. That is a point of some significance that would bear some consideration and further thinking. There are some large issues there on voluntary registration and the balance between voluntary and compulsory, which are not currently within our remit in the Bill.

[Lord Maxton]

It is right that registration should be compulsory, but voting should not.

[Lord Wallace of Saltaire]

These sorts of interesting questions are considered by the behavioural insight team at the Cabinet Office, which plays around with tipping people’s balance in favour of doing one thing rather than another, and the noble Lord is certainly beginning to touch on them.

No, we do not rue the day when ID cards were dropped, but we are persuaded that developments in the computing and electronic world, and the way in which it is possible to use digital databases and compare among them, is opening up the possibility of providing identity assurance and a simpler relationship between the citizen and state, which would not only be more efficient but astonishingly cheaper than the original ID scheme. Again, this is something that needs further exploration, and I will do my best to provide one or more briefings for interested Peers.

On the question of whether we have discussed this with political parties, the answer is yes, of course, on a number of occasions. I particularly enjoyed the meeting which Chloe Smith, myself and a number of others had with the HS Chapman Society—a body of electoral agents chaired by the noble Baroness, Lady Gould—at which we had some fairly sharp questions, including some to registration officers about the particular details in the Bill. We fully understand that political parties have a great deal of expertise. I am told that the noble Lord, Lord Rennard, has a little expertise in this area himself.

I was asked by the noble Baroness, Lady Hayter, about the lessons that the Government have learnt from the low turnout in the PCC elections: I would want to add from the low turnout in by-elections as well. The lesson that we all need to learn from the declining turnout—this is a matter which all political parties need to talk about—is that people are less and less engaged in politics, and that we have to fight very hard, which necessarily means on an all-party basis, to re-engage our disillusioned electorate and persuade them that it is worthwhile to support candidates for election and to take part in the political process. We should also recognise that we have to overcome the barriers which an increasingly cynical media place in front of us as we attempt to do that.

I was asked to comment on the Northern Ireland report out today. I recognise that it is a sobering report, which raises a number of questions. I take the point made by several Peers about the relevance of the annual canvass for this. We will, of course, as well as the Electoral Commission, take that into account. I think it shows just how difficult the task is to maintain a complete and accurate electoral register. As we go through this transition, we have to make sure that we make every effort possible to arrive at as complete a register as we can. Having made those points I hope that the Committee will accept this order.

Motion agreed.

Charitable Incorporated Organisations (Insolvency and Dissolution) Regulations 2012

Lord Wallace of Saltaire Excerpts

Tuesday 27th November 2012 Grand Committee

Moved by

[Lord Wallace of Saltaire]

That the Grand Committee do report to the House that it has considered the Charitable Incorporated Organisations (Insolvency and Dissolution) Regulations 2012.

Relevant Documents: 10th Report from the Joint Committee on Statutory Instruments

[Lord Wallace of Saltaire]

My Lords, the next two instruments on the Order Paper form part of a package of secondary legislation that will enable the implementation of the long-awaited charitable incorporated organisation. The package builds on the framework introduced by the previous Government in the Charities Act 2006, which is now consolidated in the Charities Act 2011.

The CIO is the first legal structure in England and Wales designed specifically and only for charities. Just over 80% of registered charities currently have an unincorporated structure, either as a trust or unincorporated association. But an unincorporated structure exposes trustees to potentially unlimited financial liability and means that contracts have to be entered, and property held, in the names of individual trustees. Many charities have sought the benefits of incorporation through incorporating the charity as a company limited by guarantee. This brings the benefits of limited liability for members, protection for trustees and, as the company has its own legal personality, makes it easier to enter into contracts and to hold property. I have to say that, before I began to get into the whole charities world, I had not realised just how many charities hold property.

The downside of incorporating a charity as a company is that it results in dual-regulation and registration under company law and charity law. The CIO is a structure that has the benefits of incorporation but is registered and regulated solely under charity law by the Charity Commission. It will represent a significant reduction in red tape for charities that want the benefit of limited liability.

Although the CIO model is intended to be a relatively easy way to set up and run a charity, it also has to be robust enough to inspire public confidence. As it has the benefits of limited liability, the CIO framework needs to provide the right level of protections for third parties which may wish to do business with the CIO, in particular lenders and contracting authorities. We believe that the draft package of secondary legislation achieves the right balance between ease of operation on the one hand and third party protections on the other. I hope that it will help noble Lords if I give a brief explanation of the instruments before us today.

--- Later in debate ---

I know the Minister will have answers to these questions; I have seen the pieces of paper going towards him. The queries do not undermine our support for this, but having been involved in insolvencies—as he will have gathered—for a bit of time, one cannot help but notice the small print.

[Lord Wallace of Saltaire]

My Lords, I thank the noble Baroness, Lady Hayter, for her questions. She asks fewer questions than many Front-Benchers from the Opposition, and they are always extremely well thought through. She explains what she is asking, so it is possible to write down each question as she asks it—unlike some of her colleagues, who fire questions so rapidly that it is impossible to write them down or remember them afterwards.

I am extremely grateful that, some years ago, I became a trustee of two musical charities before I realised that I would have to learn so much about the enormously complicated world of charities. I am even more surprised to discover now as I read through the material that what I thought were two small charities—one with a turnover just short of £500,000 and the other with a turnover of about £250,000 a year—rank as medium, or even on the fringes of large charities. There are many that are much smaller than that in terms of their turnover.

I apologise that it has taken so long to come to this, but if the Government are at fault, it is partly because they have spent such a long time consulting all the affected parties. It is also the case that the insolvency issues have been extremely complicated, and getting the question of insolvency and dissolution right—which involved an external review by insolvency and charity law specialists—was something that we wanted to make sure we achieved. Charities law, as Members of the Committee will know, is a very complex and specialised field—it is only about 500 years old as it has slowly developed—so when we make changes, we want to make sure that what we are doing will stand for a considerable period.

I take the point made by the noble Lords, Lord Hodgson and Lord Methuen, about encouraging volunteers to come forward and limiting the liability of trustees and other volunteers. We note and welcome the two reports by the noble Lord, Lord Hodgson, Unshackling Good Neighbours and his very large and worthwhile review of the Charities Act 2006. We are alive to his concerns and, while we cannot at this point say anything specific, we hope that there will be a response to this in reasonable time.

The noble Lord, Lord Hodgson, also raised the question of powers to ban trustees. The Charity Commission has very wide powers to suspend or remove trustees; we nevertheless recognise, as he pointed out in his Charities Act review, that there are one or two gaps in the Charity Commission’s powers, and this is something that we look to address. Of course, the conversion into charitable incorporated organisations will do something to resolve this issue.

The noble Lord, Lord Hodgson, also raised the provision of training for trustees of charitable incorporated organisations. That is something on which we will have to consult the Charity Commission. I take the point, however, that if company directors are now to receive more effective training, that should apply also to trustees. From my own limited experience, I have learnt that one needs someone with considerable legal skills as well as someone with very useful accounting skills on any board of trustees of a charity with a reasonable turnover.

The question of when charitable companies will be able to convert to charitable incorporated organisations has been left to the last phase. According to my notes, charitable companies will be able to convert in the course of 2014, which will also be phased in by size of turnover. Separate conversion regulations will be laid in 2013.

The noble Lord’s point about repetitive reports and returns will of course be eased by the transition; indeed, part of the purpose of moving towards charitable incorporated organisations is precisely to simplify the level of returns that charities and charitable companies have to provide and to reduce duplication.

The noble Baroness, Lady Hayter, raised the question of shell charities and their necessary continuation. This is a very complex area, particularly, as she remarks, because of the issue of legacies and wills that have been written a very long time before. I am not entirely sure what the answer to this is, and I will write to her with more detailed concerns.

I am very struck by the issue of what one might call moribund charities. I am struck by the fact that some of the new community foundations in Yorkshire have been doing useful work in discovering charities that are in effect simply sitting on assets that are no longer used, and persuading them to dissolve or merge into the community foundations and use those assets now for more appropriate, but related, functions.

The noble Lord, Lord Hodgson, asked why we do not have the general regulations and the commencement order, and how that will all be brought into force. The general regulations are subject to the negative resolution procedure and therefore cannot be laid in draft. They, along with the commencement order and the draft instruments that we are considering today, will all be made at the same time once both Houses have approved these affirmative instruments. A draft copy of the general regulations is annexed to the Explanatory Memorandum to the dissolution regulations.

I hope that I have covered all the necessary points. On the question of criminal liability if, on the dissolution of a CIO, one of the trustees is unaware of an insolvency event, I congratulate the noble Baroness on the detail and technicality of her question, and I hope she will accept that I will have to write to her with the answer.

Having answered those points, I hope that all Members of this Committee will welcome this order; it has taken rather longer than many of us would have liked but it is now coming in. It is actually a major and very constructive development for the charity sector. I therefore hope that it will receive a welcome and that we will begin to see this new form of charitable status taking effect over the next three to four years.

Motion agreed.

Charitable Incorporated Organisations (Consequential Amendments) Order 2012

Lord Wallace of Saltaire Excerpts

Tuesday 27th November 2012 Grand Committee

Moved by

[Lord Wallace of Saltaire]

That the Grand Committee do report to the House that it has considered the Charitable Incorporated Organisations (Consequential Amendments) Order 2012.

Relevant Documents: 10th Report from the Joint Committee on Statutory Instruments

Motion agreed.

European Union Committee Report

Lord Wallace of Saltaire Excerpts

Monday 26th November 2012 Grand Committee

[Lord Wallace of Saltaire]

I thank the noble Lord for his six-minute speech. I am conscious that we are past 7.30 pm and I will attempt to be shorter than is usual in a wind-up speech and I will promise to write to noble Lords if I do not cover everything. I should start with a number of regrets. I share the Committee’s regret that the House took a decision to reduce the resources available to the committee. I recognise that this is an issue for the whole House in terms of how many committees the Lords should have and what resources are available. That is part of the wider debate about the future of this Chamber which we tackled and failed to come to a conclusion on earlier this year.

The Government value the work of this committee enormously. I value the work of this committee enormously. I feel that I almost came in at the beginning of it. Michael Wheeler-Booth, the first Clerk of the committee, used to enjoy telling the story of how a young woman who was one of the few experts on the EU outside the Government at the time came to give evidence to one of the first sessions and he gave her a double gin and tonic to stiffen her nerves. That young woman, my wife, was also educating me about the European Union at the time.

When I was chair of one of the sub-committees I was conscious of the very high reputation that our reports have in Brussels. I met last Thursday with a Polish Minister who, in almost his first remark, said how glad he was to be in the House of Lords and how much the Polish Government valued the reports of this committee, so we are maintaining the standard and the reputation.

We are all conscious that the weight of work and the number of Commission proposals and communications —and therefore of Explanatory Memorandums— continues to grow. This committee struggles very well to strike the balance, to which the noble Lord, Lord Boswell referred, of detailed scrutiny and capturing wider issues at an early enough stage to influence the debate. A number of excellent examples of that have been mentioned today

Let me say a little about the Government’s current approach to the European Union and therefore to the role of this committee. Her Majesty’s Government are strongly committed to continued membership of the EU, as my noble friend Lady Warsi repeated in the Chamber today, and to active engagement in the development of European Union policies. This is not from any commitment to a European ideal, let alone, as some Eurosceptic conspiracists claim, to the creation of a European superstate: it is, clearly, that the coalition Government believe that continued membership remains in the UK’s national interest. That is our belief and that is how we have to defend the European Union. As the noble Lord, Lord Liddle, remarked, it matters not whether we are pro or against: we have to look at the hard evidence and see where Britain’s interests lie.

The noble Lord, Lord Marlesford, attacked the European project—the belief in an ever closer union through which power would progressively be transferred from national Governments to Brussels. That is now over, although there are still some within the Commission who cling to that ideal. Generational change has swept away some of the old disillusion with the European state and enthusiasm for Europe instead, but our interests remain engaged with our neighbours across a range of shared concerns.

Of course, the current crisis in the eurozone is forcing changes in the EU’s priorities and structures, as the noble Lord, Lord Giddens, remarked. The Foreign Secretary, in his speech in Berlin, and the Deputy Prime Minister, in his speech at Chatham House, in the past few weeks have both addressed this broader issue. As the Foreign Secretary said during his recent speech in Berlin, the EU will be stronger if it made more sense to people by acting only where there was clear justification for action at the European level, which is one of the themes that we all need to discuss. The catholic principle of subsidiarity, which to me is similar to the liberal principle, is that decisions should be taken as close to those they affect as possible; that the most democratic politics is local politics. I say in mild criticism that I am not ever sure that grass-roots sport is an appropriate area in which the European Union should interfere.

One should always ask the hard question of whether or not such matters are dealt with by the federal Governments in Australia, Canada and the United States, and if they are not, we should look carefully before we transfer competence, authority, cost and benefit to the far weaker and less democratically accepted institutions of the EU. That is what we are trying to do in the balance of competences exercise. I encourage this committee, as the whole Government wish to encourage it, to get as actively engaged in the balance of competences exercise as possible over the next two years. I speak with some passion on this because I have now been nominated as one of the three Ministers who will play a role in scrutinising this review within government and we are looking for engaged and expert partners on the outside. We will be briefing the committee throughout as fully as possible and I hope that it will respond to calls for evidence. This will help to inform an evidence-based debate within the UK, which is what we now need.

I hope that, as the noble Lord, Lord Liddle, has said, we are opening up again a wider, rational debate about whether Britain should stay in the EU. I stress “rational” debate, because when I saw the 10-page spread in the Daily Mail last week about common purpose and the conspiracy in the Leveson inquiry, I rapidly went on to Google to see what was behind it and found myself discovering the wider shores of Euroscepticism. One of the articles even told me that Francis Maude is not really a Conservative but is part of the socialist conspiracy to establish a European superstate. This is the world of alternative reality and irrational belief. Mainstream arguments are the ones that we have to address, with, as the noble Lord, Lord Liddle, said, the rational Eurosceptics—and there are many. That is what the balance of competences exercise in Britain, but engaging others, wishes to do. We already have some interest from Berlin in contributing to that exercise. Chancellor Merkel has said that less in some areas is a good thing for the European Union, and the leader of my party, the Deputy Prime Minister, when he was an MEP used to talk about the European Union doing less better, which is an entirely sensible approach.

The balance of competences review is very important to us in promoting a debate and therefore, I hope, to your Lordships as a committee. Similarly, the whole question of the JHA opt-in, the Protocol 36 debate, is one in which we hope that the committee will remain actively engaged. The Government have not reached a settled view on the final decision to opt in or opt out. Noble Lords will remember the exact words used in the Statement given to Parliament, which were that the Government’s “current thinking” was to opt out, which meant that a final decision had not yet been taken. It very much depends on active debate in detail on the various proposals made, consultation with other Governments, consideration of national interests and so on. In terms therefore of engagement with Parliament, we are committed to a vote in Parliament when the Division comes up and we wish therefore to maintain active discussion on all these matters—I hope perhaps on the Floor of the Chamber as well as in Grand Committee.

A number of noble Lords, in particular the noble Lord, Lord Roper, talked about co-operation with other national Parliaments. Again, Her Majesty's Government would encourage your Lordships to develop those links as far as we can. I am a member of a European affairs sub-committee of the Cabinet which is about to go to Berlin in early January for its second meeting there and its third meeting overall with our German counterparts. Germany is clearly one of the most important partners that we have to deal with in the world and the most important partner in the European Union. We hope that your committee will perhaps develop a similar bilateral relationship with your German counterpart but also pursue further the ways in which COSAC, COFADS and the various other conferences of your EU Committee chairs can help you to plug into other national debates.

A better awareness of the complexities of national history was what the noble Lord, Lord Maclennan, talked about, which of course fits in with another issue that we were discussing last week: the 100th anniversary of World War I. I remind your Lordships of the 300th anniversary of the Hanoverian succession. I trust that the House will plug into all those matters. If I may rapidly put in a plug: I am interested in discovering what your fathers, grandfathers and great uncles did in the First World War. I have so far discovered in this House one whose grandfather fought for the Germans at Tannenberg, another whose father fought for the Austrians at Caporetto and a third whose father was rescued from a torpedoed troop ship by a Japanese destroyer. There must be a lot that will demonstrate to us the complexity of our relations with our European partners in our modern world.

I strongly sympathise with those who have said that the third task of this committee, which is outreach and engagement with wider public needs, as the noble Baroness, Lady Parminter, said, needs to be thought about further. That perhaps means asking for more time in the Chamber and paying more attention to making sure that reports are fully covered in the media and get on to the “Today” programme, as I know you have succeeded in doing, rather more often.

The noble Lord, Lord Giddens, asked about the mysterious process by which Peers are selected and invited to join committees. That sounds like a subject worthy of in-depth sociological analysis, but perhaps if he were to ask his good Whips they would tell him a little better.

The noble Lord, Lord Jay, asked about representation at the EU peace prize. That has not yet been decided although some interesting and rather imaginative ideas are currently floating around Whitehall.

We need a wider debate in the United Kingdom and across the EU, as the EU now struggles to adapt to the current crisis in the eurozone, to deal with the challenge of further enlargement. We all recognise that enlargement is getting more and more difficult and, with each extra applicant country, there is a lot to contribute. Perhaps the committee would like to invite evidence from Norway and Switzerland. The chairman of the recent massive Norwegian study on the advantages or disadvantages of Norway’s current relationship with the EU—

[Baroness O’Cathain]

I am rather astonished to hear the Minister say that we should go and get evidence from Norway. We have; we do it all the time. There is a disconnect between people in government who are in ministries in positions of power and those who work on the sub-committees. There is a lot of discomfort, too, about the response, both in the Chamber and from the Government, to the very difficult reports on which we have spent hours and weeks collecting evidence. The Government’s response to reports is pathetic and the Minister ought to look at that.

[Lord Wallace of Saltaire]

I stand corrected. I am not sure whether the justice and home affairs inquiry has yet taken evidence from the Irish Government, who have a clear stake in the question of the opt-out or the opt-in. It may be that the Irish Government—

[Lord Hannay of Chiswick]

Just to enlighten the noble Lord, as he has effectively asked a question, the call for evidence does address the Irish dimension. It will, of course, be a matter for the Irish Government to decide whether or not to offer evidence. I do not think that we should go around telling other Governments what they should do. It has been made clear to them that evidence would be extremely welcome.

[Lord Wallace of Saltaire]

I thank the noble Lord very much for that. I happen to know that there are those within the Irish Government who are enthusiastic about coming to give evidence, and I look forward to them accepting the invitation that has been made.

The wider issue we all face is the gap between globalisation—internationalisation—and publics who regret the extent to which power is slipping away from local control. Last summer I read an excellent book by Dani Rodrik, the Turkish economist who is now at Harvard, on the limits of globalisation in which he talks about the underlying contradiction between popular desire for stability, local control and understanding what has happened, and the driving forces of a global economy—the global social elite, immigration, et cetera—that appear to be taking power away from the local level and sweeping away autonomy, identity, sovereignty and democratic accountability. That is the tension that we all face. In the United States the American Tea Party takes it out on international law, international organisations and the federal Government. In Britain, by and large, our often disturbed and discontented public take it out on the European Union. Part of what we have to do is address that contradiction to see how far we can persuade our public that some of the regulation that now appears to them to be imposed from the European Union is unavoidable, desirable and necessary, and to persuade the European Union in return that it should not attempt to regulate everything in sight or expand its competences too far.