Charities Bill [HL]

Baroness Barker Excerpts

Wednesday 7th July 2021 Grand Committee

[Baroness Barker (LD)]

I declare my interests as set out in the register. I preface my remarks by saying that it is a welcome return to see the Charity Commission doing what it alone can do—providing detailed expertise to charities to enable them to perform their functions to the best of their abilities—and getting away from its practice over the last three years of issuing generalised sweeping criticisms of the sector, which has done neither it nor the sector any good.

Before I turn to the details of the Bill, I am reminded that the last event I attended or hosted in your Lordships’ House last March, before Covid hit, was a reception for military charities. I was a rather unlikely stand-in for the noble Lord, Lord Dannatt, who was indisposed. I said to the people who asked me to take over at the last minute that it was possible that they could have found a Member of your Lordships’ House who was less like the noble Lord, Lord Dannatt, but I could not think of one right at that moment.

In preparation for that, I read a book that someone had given me by Peter Grant that details the development of philanthropy during the First World War. It is a great book, full of fascinating detail about newspaper appeals for socks and cigarettes to be sent to Belgium. They were gathered in mass amounts, and then bodies were left not knowing how to get them there without it costing a fortune. Fraudulent schemes were set up, as were duplicate schemes, all in the name of doing good for soldiers and for people displaced by the war. It is a very good and essential read for anybody interested in this area because it proves that, as the noble Lord, Lord Hodgson of Astley Abbotts, said, not a lot has changed in the charity world since 597, only the context in which things happen.

That is germane to the Bill. We are currently at a point when charities, which are regulated, whatever their form, and required under charity law to produce accounts and to be transparent about their support, find themselves up against entities that are called organisations but which may be nothing more than a couple of people with a Facebook page and crowdfunding. They have no accountability or transparency, yet the two are treated equally by the media and the general public. At some point, not in this Bill but in the next 10 years, we will have to return to the question of “What is a charity?” Perhaps that is something to which the noble Lord, Lord Hodgson of Astley Abbotts, might turn his considerable expertise.

In preparation for today’s debate I attempted to read Law Commission report 375—all 484 pages of it. Sadly it is no longer available in hard copy. I find that quite difficult, but I have done my best to get through it. It is important to go back to that source document, to read the Government’s response and then work through the Bill with the Explanatory Notes, because at each stage bits of detail emerge and get lost over time, which has led to this Bill. When we come to Committee we will have to be well informed about all the work at each stage so that we can consider the job before us, which is to determine how well the Law Commission has done what it said it was going to do, which was:

“To remove unnecessary regulation and bureaucracy”,


to ensure that appropriate regulation is in place,

“To increase the flexibility of trustees to make decisions in the best interests of their charities … To confer wider or additional powers on the Charity Commission … to increase its effectiveness … To ensure adequate protection of charity property”,


and

“To remove inconsistencies and complexities in the law”.


We need to do that because, in seeking to make the regime governing the regulation of charities somewhat more flexible, we risk handing the media extra sticks with which to beat charities. Some parts of our media have causes that they do not like and they are always willing to jump on a charity for any reason. We have to gauge whether this job has been done properly.

I welcome the proposals to make it easier and less cumbersome to change the governing documents of a charity. I have done that, and it is quite onerous. If we boil down the Law Commission’s proposals, it wants to enable charities to change not what they exist to do but the way in which they go about achieving what they exist to do. In that respect, those proposals are welcome. That said, there is a principle in all this that the more freedom charities have to make amendments to things such as their governing documents, the greater the onus on them should be to explain directly to the general public, in their annual reports, what they are doing and how they are doing it.

On the matter of payments of trustees for goods, the noble Lord, Lord Hodgson of Astley Abbots, set out a case for that in his report acceptably well. But I think it is necessary for there to be guidance for trustees on how they should use this power and on good practice, such as whether they should be doing things like getting good quotes or taking into account issues such as social value.

The powers of the commission to change the names of a charity, or establish who the trustees are, are quite a technical area, into which I would like us to take a deeper look, because it is not clear to me, from the Explanatory Notes, why the Charity Commission would be better placed to determine who was a trustee of a charity than the charity itself. Certainly, the power to challenge the registration of a charity’s name is important, but I would like to know from the Minister how members of the public or other charities could object to the registration of a new charity with a particular name, because, presumably, that is the trigger for action by the Charity Commission. It would be really helpful if the Minister could shed some more light on that.

People working in the field of charities have wanted cy-près schemes to be reformed for a long time. My own example is being approached by a bunch of trustees who had a small endowment, the purpose of which was to provide coal for the needy widows of a parish in Sussex. In the 1990s, they made the not unreasonable assessment that anybody who was using coal was probably cooking on an Aga and did not really need charitable help to get by, so they wanted to try and find a fuel property charity.

The noble Baroness, Lady Fraser of Craigmaddie, mentioned beneficiaries. I think it is implicit that beneficiaries are taken into account for any cy-près schemes, but she wanted to see that there were no grey areas. I am afraid there are nearly always grey areas in cy-près schemes, but the question is how the people making the decision explain and justify their treatment of those grey areas. It is good to see that there will be a quinquennial review of the amounts of money that are taken in.

I broadly welcome the process for updating some of the archaic processes for amending governing documents of statutory charities and royal charter bodies. My noble friend Lord Wallace of Saltaire cannot be here today, sadly, but he hopes to deal with that in more detail at future stages, especially with regard to large educational establishments. It is important to note that royal charter bodies cover a huge range of entities, from ancient educational charities through to organisations such as the National Citizen Service, which, frankly, should never have been given royal charter status in the first place.

One matter that I would like us, in Committee, to spend quite a considerable amount of time on is insolvency of trusts and insolvency of trustees of trusts. It is a very technical part of the Law Commission’s briefing, on which I think the noble Lord, Lord Hodgson of Astley Abbots, has much to tell us, particularly in relation to the sequencing of the insolvency and the impact that that has on creditors—creditors both of the trust and of the trustee. That is the kind of mind-bending detail that I think Members of your Lordships’ House were put in this place to deal with.

I agree with the noble Lord, Lord Hodgson, that we are under a particular obligation to deal with the two main recommendations of the Law Commission that the Government have rejected. On recommendation 40, in relation to the charity tribunal, infrastructure organisations within the charity sector wanted to support the Law Commission proposal that

“it should be possible to obtain authorisation to pursue ‘charity proceedings’ under section 115 of the Charities Act 2011 from either the court or the Charity Commission … where the Charity Commission would face an actual or apparent conflict of interests”.

The question of “conflict” for the Charity Commission is one that has been dodged, and we should return to that. The second recommendation relates to the role of the Attorney-General. The noble Lord, Lord Hodgson, set out the case on that matter in a way that was memorably clear. There is no need for me to reiterate it, but we should go back to that as well.

I have two minor points. I want to ask the Minister about the question of access to the governing document of a charity. I have spent a considerable amount of time looking at governing documents and going through the register of charities. The register of charities has been given a new format, and I believe that there is now a shortened version of the governing documents of charities on it, not the full document. Can she say what obligation there is on any charity to make its full governing document accessible to the public?

Finally, as this is a Law Commission Bill, can the noble Baroness assure us that, in Committee—which will not be in the usual format for our House but slightly different—we will be given time to go into matters of very great detail? These Bills come along once in a very long while; they deal with matters that are of immense importance to a very few people and require detailed and expert consideration. With due deference to the other House, it is for those of us in this House who have the expertise and the time to give to matters such as this, which may seem trivial to others, to do so. For that reason, I strongly commend to noble Lords that we rally behind the noble Lord, Lord Hodgson of Astley Abbotts, in asking that the issue that he raised about the Attorney-General be considered extensively before the Bill leaves this House.

I am very appreciative of all the work that has been done to get this Bill to this stage, and I very much look forward to working with Members of your Lordships’ House to take it through its further stages.