Charities (Protection and Social Investment) Bill [Lords]

Andrew Murrison Excerpts

Thursday 3rd December 2015 Commons Chamber

[Matthew Hancock]

I was going to come on to the work of my hon. Friend and his Select Committee in making sure that the Bill is in the best possible shape. I am very grateful for the work that he did at the end of the last Parliament, after the National Audit Office report, to make sure that when we had a Bill, it gave the commission the necessary powers.

We believe that the Charity Commission has the power to convene meetings in public. However, I recognise that there is a question over whether it does so. During the passage of the Bill, we will look at that point in more detail. We are prepared to accept amendments, if they are necessary to bring clarity on the point that my hon. Friend raises.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

I agree with my right hon. Friend that pre-legislative and legislative scrutiny are extraordinarily important in this place. Will he observe, for the record, how much legislative scrutiny is being performed by Her Majesty’s official Opposition, since there are precisely no Opposition Back-Bench Members in the House?

[Matthew Hancock]

I hope that this Bill can unite both sides of the House. I welcome the hon. Member for Redcar (Anna Turley) to her place. My hon. Friend has made his point very clearly and it will appear on the record, but I do not want to get into an unnecessary dispute with the Opposition, given that I hope we will have all-party support for this important Bill which will strengthen the role of the Charity Commission and, ultimately, be in the best interests of charities throughout the land.

As I said, we want to provide a tough, clear and proactive regulator. Under the strong and capable leadership of William Shawcross and Paula Sussex, there has been a direct focus on tackling abuse and mismanagement. However, an effective regulator needs to have teeth. As the NAO reported, the commission needs our help to address the “gaps and deficiencies” in its legal powers. The Bill will close those gaps in the commission’s capabilities, as well as tackling a number of damaging loopholes in charity law.

Let me briefly outline the five new powers that the Bill confers. These powers will help to protect the public, the staff and the people our charities serve from those who would seek to exploit them. First, the Bill will extend the automatic disqualification criteria. Currently, the focus of the law is on barring people who have misappropriated charitable assets, but the criteria are far too narrow. We will extend them, as my right hon. and learned Friend the Member for Harborough (Sir Edward Garnier) said, to include people with unspent convictions for money laundering, bribery, perjury or misconduct in public office, those on the sex offenders register, and those convicted for terrorism offences, including individuals subject to an asset-freezing designation.

Secondly, the Charity Commission will be given new powers to disqualify in instances where an individual has behaved in a way that makes them unfit to be a charity trustee, acting on a case-by-case basis and using its judgment and discretion. That new power is essential to empower the Charity Commission to tackle those who would bring charities into disrepute, and I hope that it will be used with care and decisiveness.

Thirdly, the Bill gives the Charity Commission a new official warning power in response to low-level misconduct. That will allow a more proportionate approach for less serious cases. Fourthly, the Bill grants a new power that allows the Charity Commission to direct the winding up of a charity following a statutory inquiry. That would apply if the commission proves that a charity is not operating, or that its purposes could be promoted more effectively by ceasing to operate, and that to do so would be in the public interest. We expect that power to be used in limited circumstances, and it is subject to several safeguards.

Fifthly, the Bill closes a loophole that allows offending trustees to resign before they are removed by the commission, and then act as a trustee for a different charity without fear of repercussion. That will ensure that trustees are no longer able to escape accountability if they abuse their position of trust. As with all the commission’s existing powers, all five of those proposals would be subject to the general duty to have regard to best practice. With the exception of the official warnings power, all the commission’s new powers are subject to a right of appeal to the charity tribunal.

All five measures that I have outlined are essential to protecting the interests and reputation of the vast majority of charities that are run by people of great integrity. The Charity Commission was closely involved in developing the powers, and it fully supports them. In addition, independent research for the Charity Commission found that 92% of charities supported new, tougher powers for the regulator.

We also intend to remove clause 9, which was added on Report in the Lords. We have serious concerns about the unintended consequences of that clause, as it attempts to encompass complex case law into a single statutory provision. It would also impose a major new regulatory responsibility on the commission. Clause 9 was not proposed because of concerns about charities in general, but in a narrow attempt by the other place to undermine the Government’s manifesto commitment to extend the right to buy. It is regrettable that a Bill with widespread support was used in that way, and we cannot allow that to stand. I urge the House to reject that anomalous clause and consider the matter elsewhere.

The challenge of regulating charity fundraising has already been mentioned. We can be incredibly proud that we are one of the most generous countries in the world when it comes to charitable giving, but although people are happy to give, they do not want to be bullied or harassed into doing so. A voluntary donation must be voluntary. Earlier this year we heard about the tragic case of Olive Cooke, Britain’s longest-serving poppy seller. For years, she was targeted with hundreds of cold calls and requests for money. More than 70 charities bought her details or swapped them with other charities, and in one month alone she apparently received 267 charity letters. Sadly, since then more cases of unscrupulous fundraising practices have come to light, and we must act.

We began by asking Sir Stuart Etherington to review the regulation of fundraising over the summer, backed by a cross-party panel of peers, and I thank them for their work. Sir Stuart recommended a new, tougher framework of self-regulation, and we are working with charities to deliver that. Lord Grade of Yarmouth will chair the new independent body at the heart of that framework. It will be paid for by large fundraising charities, and it will be able to adjudicate against any organisation that is undertaking charity fundraising. The body will be accompanied by a fundraising preference service—similar to the telephone preference service—which will give the public greater control over their consent to receive charity fundraising requests.

Next, we will prohibit contractors from raising funds for a charity unless the fundraising agreement between them explains how the contractor will protect people from undue pressure, and sets out how compliance will be monitored by the charity. It will require large charities to include a section in their trustees’ annual report on the fundraising undertaken by them or on their behalf. That will include an explanation of how they protect the public in general, and vulnerable people in particular, from undue pressures and other poor practices.

[Matthew Hancock]

I welcome that review, and I hope that during the passage of the Bill we can consider—and where appropriate take on board—any recommendations to improve it. I am glad that the work of that Committee is taking place concurrently, and I hope that recommendations will come forward in time for them to be considered for the Bill.

[Dr Murrison]

How can we make more explicit the amount of money spent on management overheads, and in particular the £80 to £120 per direct debit set up that goes to chugging agencies? That must be made crystal clear to people. That is, on average, the amount for the first year of any direct debit set up in favour of a charity. At the moment, people are not clear how much of their generosity is being expended on management overall and on that practice in particular.

[Matthew Hancock]

I am a great fan of transparency and a supporter of transparency across Government. We should consider carefully whether further transparency should be applied to charities, and how that is best delivered. I have no doubt that transparency begins at home for charities, and best practice is for them to be widely transparent about their operations. There is a question about whether we should do more in law, and balanced arguments in both directions. I hope we can consider that during the passage of the Bill.