Charities (Protection and Social Investment) Bill [Lords]

Robert Jenrick Excerpts

Tuesday 26th January 2016 Commons Chamber

[Anna Turley]

Would not the right hon. Gentleman agree, therefore, that for a charity that is picking up the pieces left by diseases such as cancer or heart failure, it is a better use of taxpayers’ money to lobby for better investment in prevention and research and development?

[Robert Jenrick (Newark) (Con)]

I am sorry to relive arguments that were heard in Committee, but the only example that was given to the Committee of the so-called chilling effect or of a charity being prohibited from carrying out activities by the so-called gagging law was that of the Badger Trust. That organisation was explicitly party political. The chief executive officer, Dominic Dyer, sent out an email using the charity’s email system to all its members, who may have had any party political affiliation or none, saying that he had contributed to the Labour party’s rural manifesto, that it was wonderful, that they should turn up at the launch of the manifesto, that they should take part in an anti-Cameron rally and, presumably, that they should vote Labour. The hon. Lady said that she supported that kind of behaviour, which was illegal. Surely Members from all parts of the House can agree that such behaviour is wrong. New clause 3 should be defeated because it would give the green light to that sort of extremely negative behaviour.

[Anna Turley]

I am surprised that the hon. Gentleman has a problem with negative behaviour—I am afraid that it is a fact of life. Having looked at the evidence from the Charity Commission on that case, I still struggle to see what was wrong with the situation. I am very happy to continue that conversation with the Charity Commission.

The hon. Gentleman says that that was the only evidence given. More than 160 charities signed a letter to the Government ahead of the general election saying that the legislation should be scrapped, including Save the Children, the Salvation Army, Oxfam, Greenpeace, Age UK and Amnesty International. The charity sector is up in arms.

Charities (Protection and Social Investment) Bill [ Lords ] (Fifth sitting)

Robert Jenrick Excerpts

Thursday 7th January 2016 Public Bill Committees

[Anna Turley]

My hon. Friend is absolutely right, and he is right to pay that tribute. There is often a political motivation behind such proposals that resents the fact that a party, once it is in power, has to accept that people will challenge it and hold it to account.

[Robert Jenrick (Newark) (Con)]

I draw the hon. Lady’s attention to the one case that I am aware of when a charity has been criticised for not being politically neutral during the general election. That was the Badger Trust. It is not a charity that I am particularly familiar with, but the Charity Commission said that there was a risk of its political neutrality being called into question. The example it gave was that Dominic Dyer, its chief executive officer, organised rallies in the lead-up to and during the general election, and emailed all its supporters, using the charity’s computer system, in advance of the Labour party’s manifesto launch on rural communities, saying that he had contributed to it and asking supporters to attend the launch event and support it—or words to that effect. Does the hon. Lady think that is right? Surely not.

[Anna Turley]

I thank the hon. Gentleman for raising that suggestion. I wonder whether he would have had the same concerns had that been done for his political party. Surely consultation is a positive thing. If a charity’s aims and objectives are welcomed and taken forward by a political party, it is surely right for it to welcome that success for its charitable objectives and its efforts to have influence, shape policy and change society. That is something to be welcomed, and the hon. Gentleman is on a difficult line with that.

--- Later in debate ---

[Anna Turley]

On the second point, perhaps they have given up hope and they may have some despair. We have certainly had a lot of support and encouragement from the sector in taking these proceedings forward. Charities have asked us to continue to press the Government on this issue and to review it. We came under a lot of pressure, and our manifesto stated that if we had won in May we would have revoked the measure.

[Robert Jenrick]

I have done some research into that just briefly over the past few days, and the only example I could find is the one about the Badger Trust, which I think most reasonable people would agree is an example of inappropriate behaviour by a charity. Can the hon. Member give us some examples of charities whose activities during the general election campaign were inappropriately curtailed as a result of the 2014 Act?

[Several hon. Members rose—]

--- Later in debate ---

[Robert Jenrick]

The hon. Lady is being generous in giving way. The reason why it is concerning is not about party politics; it is about faith and trust in charities. In my constituency, 60% of the electorate voted Conservative, I am pleased to say, but I am sure that many of my constituents who voted Conservative share her passionate support for badgers and, if they were members or supporters of the Badger Trust, would have been disappointed to see it explicitly support one political party. The statistics about lack of trust in charities suggest that of those people who say that they do not have faith in charities or that their faith in them has been diminished, the number who cite partisan and party political campaigning by charities as a reason has tripled in the past three years. Is the hon. Lady not concerned about that?

[Anna Turley]

I do not recognise that evidence, because what has come to us indicates quite the opposite.

[Robert Jenrick]

I will send it.

[Anna Turley]

Please do. To go back to the hon. Gentleman’s point, I am delighted for his sake—if not for ours—that so many of his constituents voted Conservative, but if many of them care passionately about badgers and see such measures in the Labour manifesto and not the Conservative manifesto, surely they can challenge that party’s views, because views can be changed. There will always be things that a political party stands for that we will disagree with—I am sure that many of us on both sides of the Committee feel that. Things are not set in stone and this measure does not seem inflexible and against the grain. I am happy to explore that case in more detail, but I remain to be convinced.

--- Later in debate ---

[Anna Turley]

It would not; it would just allow charities the opportunity to be free from restrictions and to able to influence political parties in the way they think best, which is what the hon. Lady was trying to defend.

[Robert Jenrick]

I promise that this is my last intervention on the hon. Lady on this point. We should be careful what we wish for here. In the United States, the blurring of the line between philanthropy and politics is much greater than in this country. In fact, it has been legal for charities to support parties and candidates for only 50 years in the US, where we see wealthy philanthropists setting up charities with blurred objectives. We should all defend against that passionately.

[Anna Turley]

I totally agree, but I am not aware that we were in the same situation as America before the hon. Gentleman’s Government introduced this Bill. I do not share his view that our revoking these powers would provoke that kind of situation. As I said at the beginning, we are trying to defend the independence and voice of the charitable sector and to enable charities to speak truth to power without fear or favour and to shape and influence their view on what would build a better society, in accordance with their charitable aims and, hopefully, with the views of many in the Committee. We will not be pressing the new clause to a vote, but we will return to the matter at a later stage. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 3

Independent schools’ facilities: public benefit

‘In section 4 of the Charities Act 2011 (the public benefit requirement), after subsection (4) insert—

‘(5) Independent schools which are charities must engage actively with local communities and state schools with a view to sharing resources and facilities.

(6) The Charity Commission must publish guidance setting out the minimum that independent schools which are charities must do to comply with the duty in subsection (5).’.’—(Anna Turley.)

This New Clause would require independent schools to engage with their local communities and state schools to share resources and facilities.

Brought up, and read the First time.

Charities (Protection and Social Investment) Bill [ Lords ] (Fourth sitting)

Robert Jenrick Excerpts

Tuesday 5th January 2016 Public Bill Committees

[Mr Wilson]

It is very kind of my hon. Friend to make those comments. It is true that the Opposition have worked effectively in the other place and, indeed, in this place. I deliberately set up the Etherington review as an all-party review because I wanted every party to be involved and to have a stake in ensuring we get this right. By and large, the Etherington review, all of whose terms I have accepted, has proved to have produced a very effective report, and we need to get on with implementing all parts of it.

[Robert Jenrick (Newark) (Con)]

I strongly support the changes in the Bill, but I want to press the Minister on the annual statement that the larger charities will have to make about how they conduct their fundraising. One question that it does not seem to ask is what percentage of the public money that is given to charities is spent on funding commercial fundraising operations. I have written to a number of charities on behalf of my constituents to ask that question, and on every occasion they have replied by saying that they cannot provide that information because it is commercially sensitive. The public want that information. They want to know how much of their money is spent on funding commercial fundraising operations, rather than on the charities. I would like that to be either in the Bill or the Charity Commission’s guidelines.

[Mr Wilson]

I understand what my hon. Friend says, and I believe there would be a level of support among the public for that. There certainly are commercial confidentiality considerations, in the same way as there are for Government contracts, but I will look seriously at what he said and come back to him.

To take that point a little further, there are questions about how extensive the problem of poor fundraising is for charities. The hon. Member for Redcar said that it is a small problem that affects a small number of charities. By and large that is true, but the Fundraising Standards Board received 52,000 complaints in one year, so the activity is deep-rooted. That is why it is important that we introduce these measures and try to do something about it. I believe that these two measures, coupled with the others, will help to stop some of the poor practices. They will ensure that there is oversight and accountability among the trustees and that fundraising is overseen directly.

Charities (Protection and Social Investment) Bill [ Lords ] (First sitting)

Robert Jenrick Excerpts

Tuesday 15th December 2015 Public Bill Committees

[Maggie Throup]

I think not only in the charity sector but across the board, evidence can be destroyed or changes made very rapidly, so the provision would begin to undermine the purpose of the Bill, which tries to help charities rather than be too draconian. That is the measure we want to take with this clause.

[Robert Jenrick (Newark) (Con)]

Does my hon. Friend acknowledge that most regulators in other spheres have the power to issue warnings without notice? For example, the Financial Conduct Authority has those powers for precisely the reasons that she has just given.

[Maggie Throup]

I completely agree with my hon. Friend. That is probably why the measure is in the Bill. It mimics what is happening across the board with other regulators.

--- Later in debate ---

[Anna Turley]

My hon. Friend makes an excellent point. We know that judicial review is pretty much inaccessible without legal assistance, and that cuts to legal aid have had a hugely detrimental impact on people who are trying to access justice.

[Robert Jenrick]

The hon. Lady is making a good point. Doe she agree that perhaps the best way to tackle that problem is through guidance from the Charity Commission? If the Care Quality Commission issues a warning, there is no formal way to appeal against it, but in the guidelines there is a 10-day period in which representations can be made to the CQC, which happens all the time. Then the CQC, having read the representations and at its discretion, can withdraw its warning.

[Anna Turley]

The hon. Gentleman makes an excellent comparison, but what happens if, at the end of that representation, the Charity Commission does not agree? Where is the right of redress or recourse after that? Judicial review is too large, bureaucratic and expensive. It is a complex, time and resource-intensive activity that is largely inaccessible without legal assistance. It is widely known as the remedy of last resort for public body decisions when all other avenues of appeal have been exhausted.

There may be a perception among the public that charities should not use their funds to pursue judicial review applications, in particular in the light of some of what we have seen in the media in the last few days about how charities spend their money, which goes against the grain of what we are trying to encourage. It has been said that if it were possible to appeal against a warning, the commission might be reluctant to issue warnings full stop, as there would be a risk that appeal after appeal would gum up the system. This implies an awareness that judicial review is not really a remedy, as it so much more costly, complex and inaccessible than an appeal to the tribunal. In any event, research suggests that of the 103 inquiries opened by the commission between April 2014 and April 2015, no more than 5% were appealed to the tribunal, which is not a significant proportion. If the warning power is meant to be only for low-level issues but could precipitate adverse publicity—we have already discussed that at some length this morning—and the exercising of the commission’s protective powers, it is illogical that it should be more difficult to challenge than the exercising of the commission’s more extensive regulatory powers, such as the power to remove trustees, which can be challenged in the tribunal.

It is also worth noting that there seems to be confusion over whether the warning power can be used for low-level or medium-level concerns. When the power was first suggested, the Cabinet Office said that it would be for medium-range abuses, for which the commission’s protective powers could be used but it is not likely to be proportionate to do so. Yet the explanatory notes to the Bill say that it will be used where the risks are relatively low. There is still a huge lack of clarity about the difference between a medium-range and a low-level concern. The possible implications of a warning, as we know, are harsh for low-level matters, so it is important that charities have a right of redress and recourse to a tribunal. Without it, they might be unable to disprove what could potentially be false allegations. We also want to ensure that the Charity Commission considers warnings extremely seriously before issuing them.

Charities (Protection and Social Investment) Bill [Lords]

Robert Jenrick Excerpts

Thursday 3rd December 2015 Commons Chamber

[Robert Jenrick (Newark) (Con)]

I welcome the Bill, which is a much needed and sensible Government reform. I am delighted that they have introduced it.

Before entering this place, I practised as a solicitor for several years. I practised corporate governance, among other areas, and over the course of the past year, I think we have all come to realise that the governance of charities is in crisis and it is affecting all charities. The large charities are infecting the small charities, which is why it is so important for this House to act.

As has been said by many Members on both sides of the House, we all support the charities in our constituencies, including those we give to and those of which we are trustees. We want them to thrive and we want public confidence in them to increase, because, undoubtedly, public confidence in charities has been knocked this year. As the head of a charity based in my constituency recently told me, charities are different from many other parts of our society. When large businesses get knocked by scandals, the public turn towards the little guys and confidence in them rises. If there is a horsemeat scandal at Tesco, we all go to our local butchers and sales there start to rise. Charities seem to have the inverse situation. If the big charities get hit by scandals, the little guys suffer as well.

It is essential that we protect the thousands of excellent small charities that we, as Members of Parliament, get to know more than most members of society. It is for them that we must ensure that the larger charities, in particular, have the highest quality of governance. That comes down to trustees. It has been a torrid year in many respects for how the large charities have behaved, whether the scandals have been about the high salaries of chief executives and the management teams of big charities, about the question of politicisation or, above all, about the question of the inappropriate use of fundraising on our high streets. Of course, there has been the tragic case of Olive Cooke.

[Kevin Foster]

My hon. Friend is making a very strong speech. Does he agree that part of it is about the public having confidence about how much of the pound that they donate ends up going to the good work of the good cause, particularly as with some of the larger charities there have been issues about how much ends up going on overheads and administration?

[Robert Jenrick]

My hon. Friend makes a strong point. I want to come on to how we can ensure proper financial management of our charities. That cuts in both directions: how they govern themselves and what percentage of their organisation and resources is deployed on central management.

Kids Company has seen the last and perhaps most prominent scandal, which has raised all manner of questions about the governance of our most high-profile and largest charities, particularly their capacity to handle their finances appropriately. I do not want to dwell on Kids Company, which is an outlier, but it has done huge damage to other charities. That is why those who have been at the heart of it and those parts of Government that have worked with Kids Company have to take it seriously. It is damaging all our charities throughout the country. The powers in the Bill to bar ineffective and inappropriate trustees from acting as trustees will be tested if there are Kids Company-type scandals in future.

[Nigel Huddleston (Mid Worcestershire) (Con)]

Is that not at the heart of the matter? The vast majority of people who work with, volunteer for or have leadership positions in charities across the UK generally do the right thing in their day-to-day activities. Through this Bill and other initiatives, we need to try to get the right balance between governance and allowing them to get on with doing the things that they really want to do.

[Robert Jenrick]

My hon. Friend makes the point perfectly. It is important to remember that the core activities of our charities are rarely questioned. They are usually performed incredibly well and incredibly sensitively and appropriately. The scandals and disappointments tend to come from the way the operation of our charities occurs. That is why it is incredibly important that trustees play their full role in managing, scrutinising and supporting those organisations, as do directors and non-executive directors of our companies.

The role of a trustee has to be at the heart of it all. The new Bill is important in that regard as the power to bar individuals who are not appropriate to be trustees and who bring charities into disrepute is incredibly important. I would be interested to know from the Minister how many trustees he believes that that would apply to in an average year. Will the difference be marginal, or will it be more significant? As for the question of preventing trustees from moving on, after damaging an organisation, to continue in many others, we all know that many people—many good people—are trustees of several charities and so, inevitably, the bad apples are also involved in many charities. We want to ensure that that involvement cannot continue.

The power to issue warnings to charities is important if the Charity Commission considers their actions to amount to misconduct or mismanagement. Of course, that must be done proportionately and the Charity Commission has not always acted proportionately on a range of other issues, including, as we heard from my hon. Friend the Member for Congleton (Fiona Bruce), the issue of the Plymouth Brethren. Had I been in the House at the time, I would certainly have supported that important campaign.

Many involved in the third sector have expressed concern that the Bill gives the commission the benefit of the doubt, but bearing in mind the importance of raising public trust in our charities, particularly the big ones, it is essential that we have a strong regulator with the tools to act. The Bill provides that.

I have some questions and thoughts for the Minister on the role of trustees. First, it is absolutely essential, as Kids Company showed—this seems a simple and obvious point—that a board of trustees contains the right range of expertise. That is stipulated within the guidance of the Charity Commission but, clearly, it does not always happen. In particular, that must include the right range of financial expertise. When charities reach a certain size, like our larger companies, they qualify to be in the FTSE 250. They are huge organisations and require individuals with genuine financial expertise and knowledge of financial controls so that they can scrutinise the organisation and hold it to account.

[Fiona Bruce]

I hear what my hon. Friend is saying, but my concern is, as the hon. Member for Clwyd South (Susan Elan Jones) mentioned, possible regulations for larger charities. My concern is how that is defined and that one might bring in the smaller charities. Does my hon. Friend not share my concern about the difficulty in attracting officers of charitable organisations, particularly to the role of treasurer, as my experience shows?

[Robert Jenrick]

I share that concern. We all know through the other organisations in which we are involved how difficult it can be to find good people, particularly younger people, as has been said, to act as trustees. Incidentally, the charitable sector is a lot more diverse than our corporate sector. About 40% of charitable trustees are women, and that figure is not the same in the corporate sector. It is important that we do not put people off from getting involved. It might be that the time has come when “one size fits all” does not work and that our largest charities, which uphold public trust and confidence in charitable giving more generally and which are very large—we are encouraging charities to merge and get larger—should be subject to far greater scrutiny and a different regime from the small ones that we all know in our constituencies and want to thrive.

[Fiona Bruce]

My hon. Friend is being very generous in giving way. Perhaps for the very small charities there needs to be some sort of Charity Commission kitemarked course that a would-be trustee can go on to ensure that they have the necessary understanding of the role required.

[Robert Jenrick]

My hon. Friend comes on to a point that I wanted to make. By the Charity Commission’s own reckoning, knowledge of governance rules and best practice is quite limited among our trustees. I do not blame them—they are busy people who are doing this voluntarily and we want to encourage that—but knowledge is quite limited. The awareness and knowledge of some of the guidance—for instance, CC3, which is “The essential trustee” guide—are quite modest. Surveys that the Charity Commission has put out to trustees of larger and small charities suggest that basic functions of being a trustee are not widely known by our trustees.

Anything that the Charity Commission can do to boost awareness without putting off our trustees is essential. I know that the Charity Commission takes that seriously, because I have spoken to it, but it needs to do something to boost that awareness and support trustees in a way that strikes the right balance between not deterring people and ensuring that they know what they are supposed to do. Some of the reports and surveys are quite scary when it comes to how few trustees understand their responsibilities, particularly as regards finance.

[Kevin Foster]

My hon. Friend is being extremely generous with his time. Does he agree that it is also important that we ensure that anyone who wants to do the best for their community or to support a good cause does not feel excluded from being a charity trustee merely because they do not have formal qualifications? It is important that the Charity Commission helps to build the skills they need, as I would not want to see trusteeship become a graduates-only zone.

[Robert Jenrick]

That is very important, but I do return to the theme of some of our biggest charities. They are major organisations dealing with hundreds of millions of pounds of not only the public’s money, through charitable donations, but the taxpayer’s money. I am nervous to dwell on the case of Kids Company, but its trustees had very little relevant expertise. One was a celebrity hairdresser—there is nothing wrong with that, but I do not expect that person necessarily to have expertise in running a major multinational business, as Kids Company had become. It is therefore essential that those organisations step up and have appropriate trustees. I would like this Bill and the Government to push our biggest charities to have those individuals.

I know that charities are now required in their annual return to confirm whether or not they have reviewed their financial controls. Clearly, that important lesson has come out of recent scandals, and such a provision is essential. Anything we can do to beef it up, without deterring the little guys, is essential.

Another issue is that, unlike as happens in companies, most trustees do not meet in mixed board meetings with their management, and so the interplay between the two is often limited. Those trustees who take their role most seriously and work hardest at it no doubt get to know the senior management of their organisation, but others do not and often rely, crucially, on the chief executive, who may be, as we have seen in other scandals, an overbearing founder. Such a person may be incredibly charismatic, powerful and knowledgeable about the organisation, but it is difficult to scrutinise them, stretch them and hold them to account. That is important, and our larger charities have started to have mixed board meetings involving executive and non-executive directors— I use the corporate setting there.

I would like the Government to think about the role of overbearing founders, because it is an incredibly important issue. Anyone involved in the charitable sector sees examples where someone who may be a brilliant individual founds a charity and then it gets out of control, as they become extremely difficult to scrutinise and perhaps the time comes when they should step aside or hand over to somebody else. Perhaps it would be appropriate for these individuals to have term limits, as we might have for a chairman of a public company, where they have to go through a rigorous procedure at the end of a certain term in order to be reappointed.

A number of our charities, even the largest ones, are riddled with conflicts of interest. We see trustees having friends and relatives employed in the organisation, and trustees sometimes getting benefits that are not appropriate. I do not think the Bill particularly deals with that issue, but it does a lot of damage and undermines confidence in the charitable sector.

Lastly, I wonder whether the Minister really believes that the Charity Commission has the capacity to regulate the vast number of charities. We have thousands of charities in this country, some of which are extremely complex organisations, as we have seen. Does the Charity Commission have the resources to do that work? I suspect it does not, a view shared by many in the sector. Some of our most experienced chief executives believe the time has come for some form of beefing up of the Charity Commission through self-funding, whereby the big charities, which are the holders of public trust and confidence, might contribute some money towards ensuring that trust in the wider sector is maintained through a Charity Commission that has the funding required to see that happen.

I know that the Minister wants to speak, so in conclusion, trustees are absolutely essential and those of our biggest charities are letting down the entire sector. Scandals such as what happened at Kids Company matter, because they are harming the small charities, which are the lifeblood of charitable giving. As a Member of Parliament, I have taken huge pleasure in getting to know and working with these charities in my constituency, and I know other Members feel the same. Those who hold those positions in the big organisations need to step up and behave as if they are non-executive directors of large and important organisations, which they are.